Pakistan producers benefit from declining coal prices

Pakistan producers benefit from declining coal prices
Published: 20 March 2009

Cement producers in Pakistan are expected to witness another increase in their profits as the industry’s basic raw material coal prices have declined by 55 per cent to date (March 2009) from the peak level in July 2008, it was learnt on Wednesday.

Prices of coal, the key cost driver of the cement sector have also declined in the international market. The prices of the commodity have come down to US$80/t from US$200 in August 2008.

The coal price hike had negatively affected the cement sector’s earnings when the coal prices increased by 139 per cent internationally in FY08. It is learnt that coal prices have declined more than 50 per cent after reaching peak level of over US$200/t in July 2008 to the current level of US$80/t. According to industry sources, cement companies are now purchasing coal at a price range of US$75-85/t and most of the coal used by local companies is imported.

"The continuous expansion of the cement industry is fuelling the demand for imported coal in the current financial year," a coal importer told Daily Times.