Pakistani cement makers say they expect to increase sharply their imports of South African coal during the financial year beginning July because of the shortage of Indonesian material.
The rise in demand is expected to boost already strong prices for South African coal because supply is limited for the rest of this year, producers and traders said.
"For this financial year, July to June, the country is likely to import 4 million tonnes of coal. If there is a shortage of Indonesian, then maybe most of this will have to come from South Africa," a senior executive at one of Pakistan’s largest cement makers told Reuters.
"We did not expect there to be a shortage of Indonesian coal. China, we knew, has stopped exporting. We will have to buy more South African coal even though it is at least US$5 more expensive than Indonesian."
Pakistan relied on cheaper Indonesian and Chinese coal for almost all of its import needs in 2006.
But China, which is prioritising domestic demand, halted exports to India and Pakistan from January and at the same time there have been severe delivery problems with Indonesian cargoes.
"We almost had to shut down our plant because of problems with Indonesian supply. But we were able to get South African coal instead," the executive added.
Pakistani cement companies have been occasional buyers of South African coal since the start of this year but buying has risen noticeably over the past month.
The coal buyer of another large Pakistani cement maker said his company was actively seeking offers of South African coal for delivery from July onwards and complained there were too few suppliers offering to Pakistan.
Pakistan imports 3.5-4Mt a year of coal, which is used as a fuel and raw material in cement production.
Increased cement production is expected to fuel further growth in coal demand over the next few years, said an official of the All Pakistan Cement Manufacturers’ Association (APCMA).
The Pakistani government’s planned public sector development programme will increase domestic demand for cement, he said. In addition, Pakistani cement makers are expecting to increase their export sales to India.