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Friday, 06 January 12
COAL INDIA LINKED COAL PRICES WITH INTERNATIONAL COAL PRICES


COALspot.com - Consumers of indigenous coal in India to pay International prices in the future. Coal India has recently moved from UHV pricing mechanism to GCV based mechanism to standardize its coal quality as well as prices. Starting from January 1, 2012, Coal India’s coal being sold based on GCV to its customers and also adjusted its coal prices based on current international coal prices, but extended discounts to its customers.

“Coal India recently linked its prices with international rates, and the company will now fix its prices after adjusting for exchange-rate fluctuations and the discounts it offers to local consumers,” Mr. Jha said, as quoted by WSJ. According to an another media,  Coal India will review the impact of linking its coal prices with international prices on its sales realization in the next three months. 

Reports also say, according to the chairman of coal India,  the new pricing mechanism will not lead to any steep rise in coal prices. 

However, market players in the opinion that, the shift to a pricing structure based on the gross calorific value of coal, from the useful heat value, could mean an increase of around 10% in weighted average prices for Coal India’s customers,  an another media quoted.

If landed price of Indigenous coal and import coal are become a same level in the future, then end-users and buyers will prefer to import coal due to easy availability, flexible supply terms and quality consistence, said an Indian coal importer, requesting anonymity.

The coal India’s move to adjust it coal price and pricing mechanism to international level and standard is a good move on the long run. Nevertheless, it may affect immediately to industry as the industry was not ready to adjust their sourcing plan. 



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