LAHORE: The disruption in the global supply chain with high coal prices has put Pakistan’s cement industry in a state of crisis. Experts have indicated that the disruption in coal supply has affected the cement industry, which may impact the price of cement in the local market.
The price of coal has risen to US$ 235 per ton in the last seven months. The global price of coal, which was US$ 140 per ton in August 2021, has now reached US$ 375 per ton, claimed the cement industry sources.
The Pakistani cement industry is also facing difficulties in the availability of coal along with fluctuations in cement prices which are having an impact on production activities.
Sources while talking to Business Recorder here on Monday CLAIMED coal is an important fuel for cement production. The proportion of fuel cost in cement production is about 50 to 60 percent of the cost. Industry sources further said despite the high prices, the availability of coal for the next two months is uncertain which will hamper productivity.
This situation has created problems for coal-fired power plants and other industries that use coal as fuel.
The cement industry is also reluctant to fix the deals of coal import due to uncertainty in the coal supply chain and price instability. Sources expressed feared that cement production could fall by up to 50 percent if coal delivery problems persist. As a consequence of falling production, the price of cement may be increased accordingly.
Pakistan’s cement industry consumes around 550,000 tons of coal monthly. Pakistan imports coal from South Africa, Indonesia, Ukraine, Russia, and Afghanistan.
The conflict between Russia and Ukraine is having a global impact on energy prices, not only driving the cost of oil higher; but also sending coal prices to record levels as demand for the fuel grows during a period of diminished supply.
Since the global economy recovered from the effects of the Covid-19 pandemic, global coal consumption has increased which has not only increased the price of coal but also affected the supply of coal.
It is important to mention that recent floods and rains in Australia, the world’s fourth-largest coal producer, and China, the world’s largest coal producer, in October last year have severely affected the global coal supply chain.
Copyright Business Recorder, 2022