In May 2023, the National Coal Index (NCI) showed a notable decrease of 33.8% compared to May 2022, dropping to 157.7 points from the previous 238.3 points. This decline in the index indicates a substantial supply of coal in the market, ensuring sufficient availability to meet the rising demand for coal.
As for coking coal, the NCI was at 187.1 points in May 2023, reflecting a decline of 32.6% from the same period last year.
For non-coking coal, the NCI stood at 147.5 points in May 2023, showing a decrease of 34.3% compared to May 2022.
The National Coal Index (NCI) reached its peak in June 2022 at 238.8 points but has been gradually decreasing in the following months, indicating an abundance of coal in the Indian market.
- Indeed, the sharp decline in coal auction premiums and the downward trend in the NCI indicate a balanced and stable market for coal in India.
- The ample availability of coal in the market is evident through the substantial stockpile held by coal companies, which ensures a steady supply to various sectors reliant on coal.
- This abundance of coal contributes significantly to the energy security of the nation, meeting the growing demands and supporting long-term energy requirements.
- A balanced market with sufficient coal availability allows the coal industry to function more resiliently and sustainably. It ensures that various sectors can access a stable supply of coal, promoting smooth operations and economic growth.
- The availability of coal at reasonable prices benefits industries, power generation, and other sectors, playing a crucial role in India’s overall energy security and development.
About The National Coal Index
The National Coal Index (NCI) is a price index that is used to track the price of coal in India. It is compiled by the Ministry of Coal and is based on the prices of coal that are traded in the e-auctions that are conducted by Coal India Limited (CIL).
- It combines coal prices from all sales channels, including notified prices, auction prices, and import prices.
- Established with the base year as fiscal year 2017-18, it serves as a reliable indicator of market dynamics, providing valuable insights into coal price fluctuations.
- The NCI is published on a monthly basis and is used by a variety of stakeholders, including CIL, coal traders, and power producers.
- The NCI is calculated using a weighted average of the prices of coal that are traded in the e-auctions.
- The weights are based on the amount of coal that is traded in each auction.
- The NCI is expressed in rupees per tonne.
The NCI is a useful tool for tracking the price of coal in India. It can be used to compare the prices of different grades of coal and to track the trends in the coal market. The NCI is also used as a basis for calculating the prices of coal that are sold under long-term contracts.
Benefits
- It is a reliable and accurate source of information on the price of coal in India.
- It is transparent and easy to understand.
- It is used by a variety of stakeholders, which makes it a valuable tool for market analysis.
Limitations
- It is only based on the prices of coal that are traded in the e-auctions.
- It does not take into account the cost of transportation or other factors that can affect the price of coal.
- It is not updated in real-time, so it may not reflect the latest market trends.
Overall, the National Coal Index (NCI) is a useful tool for tracking the price of coal in India. It is reliable, transparent, and easy to understand. However, it is important to be aware of its limitations before using it for market analysis.
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