Islamabad, Feb 18: Global coal prices have plummeted to their lowest level in a year, offering a potential cost advantage to Pakistan’s cement manufacturers. According to Bloomberg data, coal prices at Richards Bay have dropped to $94.75 per ton, marking the lowest since February 23, 2024, when they stood at $92.30 per ton.
Market analysts at Arif Habib Limited highlight that a $5 per ton reduction in coal prices could lead to a Rs. 10 per bag decrease in cement production costs. This is a significant development for the South-based cement industry, which heavily relies on imported coal for fuel.
Major cement producers in Pakistan, including Lucky Cement Limited (PSX: LUCK), D.G. Khan Cement Company Limited (PSX: DGKC), Power Cement Limited (PSX: POWER), and Attock Cement Pakistan Limited (PSX: ACPL), are expected to benefit from this decline. Lower coal costs could improve profit margins, reduce overall production expenses, and potentially lead to lower cement prices for consumers.
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This price drop comes amid shifting global demand and supply factors, with energy markets experiencing fluctuations due to economic and geopolitical trends. If coal prices continue to decline, the Pakistani cement sector could gain a competitive edge by offering more affordable products, stimulating demand in both domestic and export markets.
Industry experts believe that the reduction in coal prices could provide relief in an inflationary environment, positively impacting construction and infrastructure development in Pakistan. However, the sustainability of this price trend remains uncertain, depending on global coal demand, production levels, and geopolitical influences.
With global energy markets constantly evolving, stakeholders in Pakistan’s cement industry will be closely monitoring price movements to optimize their operations and maintain profitability.
