March 14, 2022 (MLN): To pass on the massive increase in global coal prices, Cement players in the North region have increased cement prices by Rs40-50 per bag for the third time in a row in the past 15 days, setting a new record of Rs840-850 per bag, a research note by Intermarket Securities said.
This takes the total price hike to Rs150-160 per bag.
The global coal prices have surged to $455/ton in March but are presently hovering at $355/ton – coupled with higher transportation costs amid rising petroleum prices.
According to the report, cement producers have so far passed on the cost increase up to $250/ton equivalent of coal price impact and they may further increase the prices if coal sustains the $300/ton level.
The surge in Coal prices has forced local cement players to switch towards other resources where Afghan coal has taken a lead by cutting down input costs and providing a breathing space. Almost all the North producers are substituting imported coal (majorly from South Africa) with local and Afghan coal, between 20-50% of total coal usage (mostly Afghan coal) depending on the availability and each company’s plant specification.
Presently the landed cost of Afghan coal is around $170-200 per ton. South players, on the other hand, are still majorly using Richard Bay coal while local cement prices in the region are hovering around Rs860-880 per bag, the report said.
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