West Asia conflict: Gas shortage fires up CIL's e-auction premiums to 35%

Coal India's e-auction premium rose to about 35 per cent in February 2026 as gas shortages linked to the West Asia crisis pushed industrial users towards coal

Coal India’s (CIL’s) e-auction premium — the price of coal sold in the spot market by the miner — rose to around 35 per cent over notified prices in February 2026. This comes amid a sharp shift towards coal as gas shortages hit industrial consumers, following disruptions linked to the West Asia crisis, according to a statement by Mjunction Services. 

It said the situation remains “measured rather than overheated”, with only 47 per cent of auction volumes sold so far. This suggests that both volumes and prices are likely to rise further. 

The emerging stress in India’s energy ecosystem comes against the backdrop of escalating geopolitical tensions, with Prime Minister Narendra Modi on March 23 describing the situation in West Asia as “concerning” and acknowledging its adverse impact on global supply chains and daily life. 

Industrial clusters across the country are already witnessing shortages and disruptions in compressed natural gas (CNG) and liquefied petroleum gas (LPG) supply, prompting firms to explore alternative fuels such as coal to maintain operations, the Mjunction statement said. 

India imports nearly 45-50 per cent of its natural gas requirement as liquefied natural gas (LNG), making industrial users highly sensitive to global supply disruptions and shipping route uncertainties, particularly through routes such as the Strait of Hormuz, which has been severely affected by the conflict. 

Early signals from coal markets indicate tightening demand-supply dynamics, with stronger offtake and increased urgency among buyers in auction markets. 

The demand uptick is being driven by multiple factors, including substitution from gas amid LNG disruptions, a seasonal rise in power demand, and reduced imports leading to greater reliance on domestic coal, the company said. 

“What we are witnessing is an early but clear behavioural shift in fuel consumption patterns. As LNG availability tightens and CNG/LPG supplies face disruption in several industrial clusters, buyers are increasingly turning to coal to secure operational continuity,” said Vinaya Varma, managing director and chief executive officer of Mjunction Services. 

Only about 47 per cent of auction volumes have been sold so far this year, and current premiums remain below historical peaks, indicating controlled demand conditions, the statement said. Coal stock levels at power plants remain at 18-20 days of consumption, preventing panic buying despite tightening spot demand signals, it added.

 

Supply squeeze

• CNG/LPG disruptions across industrial clusters are pushing buyers towards coal
• Seasonal power demand and lower imports are also lifting coal demand
• Power plants hold coal stocks for 18–20 days, keeping panic buying in check despite tighter spot demand
• Only 47% of auction volumes have been sold so far this year, with premiums still below historical peaks