14.97 0.03 (0.2 %)
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source: PSX

Pakistan Cement: Afghan Coal The New Gold – By Darson Research

Friday, 11 March 2022
<p></p><ul><li><span style="font-family:Arial, Helvetica, sans-serif;font-size:medium;">Geopolitical situation between Russia-Ukraine created huge volatility in commodity market hence global coal prices rallied amid intensified & tight supplies in strategic European countries which instigated European buyers to look for alternate regions like USA, Asia, Colombia and South Africa.</span></li></ul><ul><li><span style="font-family:Arial, Helvetica, sans-serif;font-size:medium;">Another factor is rise in alternate fuels like crude oil and natural gas. In a flash back scenario coal prices heightened to touch at $240/ton in the mid of Oct’21 due to gas shortages in Europe after which they started to ease off and recorded on average at a price of $147/ton till 22nd Feb ‘22 but this was a momentary scenario. As rigidities started between Russia-Ukraine from 24th Feb ’22 prices started to gain and skyrocketed to post level sanctions, as Europe expected again tightened supply of gas resulting another hike in gas prices which caused these economies to switch from gas to coal based power generation plants.</span></li></ul><ul><li><span style="font-family:Arial, Helvetica, sans-serif;font-size:medium;">In Asia and Australia supply was already tightened due to Indonesia’s ban on coal export and heavy rainfall in Australia created distortion in supply chain. Currently, the price of benchmark Richard Bay coal prices climbed to life time high recorded at $460 per ton thus increasing the risks of longer-term pain to cement industry. If this situation prolongs and direct and indirect sanctions that western countries have put on Russia and second expected ban on export of Indonesian coal may come early at the end of this month which will put more pressure on coal supplies and on prices as a consequence coal expected to shoot up towards $480-$500/ton in the near term. Thus, cement industry is expected to face maximum impact in the long run.</span></li></ul><p></p>