HomeNewsCement manufacturers breathe easy as coal prices stop climbing

Cement manufacturers breathe easy as coal prices stop climbing

At last, there is some good news for cement manufacturers as the coal crisis seems to be coming under control which may also ease the pressure on its prices. With coal prices receding from their recent highs, a large overhang on costs for the cement manufacturers will be removed. While the situation is still fluid, energy analysts still believe that coal prices may not shoot up again in the near term.

Chinese thermal coal prices had reached dizzying heights last month amid energy crisis faced by the country on account of coal shortages following flooding in Henan region in July and heavy rains in the Shanxi province (biggest coal producing region in China) that curtailed coal production. This coincided with heavy demand from industries and households, which forced the Chinese government to announce power cuts for various industries. Thermal coal prices shot up 110% in one & a half months, leading to a sharp uptick in coal prices globally. Australian coal prices touched a high of US$280 on 5th Oct’21 and South African coal prices touched US$252 on the same day.

Indian cement manufacturers were under pressure, owing to the huge uptick in input costs. Coal shortages were also seen in India with reports of coal stocks hitting new lows at power plants and Coal India Ltd diverting all supplies to only power companies. With domestic coal unavailable, imported coal expensive beyond limits and petcoke being expensive with limited availability, cement companies were staring at fuel shortages or astronomical increase in costs.

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