Coal price hikes to impact cement makers more than steelmakers

Coal price hikes to impact cement makers more than steelmakers
Published: 18 January 2007

Analysts at UBS say that a potential increase in coal prices in 2007 is likely to have a more severe impact on cement makers than on steelmakers.

In a research note published this morning, the analysts mention that Chinese coal prices are expected to rise by 5% y/y during 2007.

A 5% hike in coal prices could dilute earnings of Chinese steelmakers by 2%-5% and for other steel manufacturers in the region by 0%-0.4%, the analysts say.

Moreover, coal accounts for nearly 30%-40% of the total costs of cement makers, as compared to only 15% of the total costs for steelmakers, UBS adds.