Cement factories in north Pakistan have mostly switched to using a mix of coal sourced from Afghanistan and other countries as record-high world markets are making imports too expensive for the sector to maintain its profitability.
Northern players are currently using 70 per cent Afghan coal and are considering adding 20 per cent more local coal to the mix, reports The News International.
“Afghan coal gave a sufficient buffer to cement companies that gave them room to keep their margins sustained in short to medium term,” said Deepa Jaswani, an analyst at Darson Securities.
She said the Russia-Ukraine war had created huge volatility in the commodity market, hence global coal prices rallied amid intensified and tight supplies in strategic European countries, instigating European buyers to look for alternative regions such as the USA, Asia, Colombia and South Africa.
Currently, price of benchmark Richards Bay coal prices climbed to an record-time high of US$460/t, therefore raising long-term risks of financial hardships for the cement industry.