LAHORE - More than 20 percent rupee depreciation against dollar has jacked up the rates of imported coal to $106 per ton from $90 per ton, leading to increase in cost of production for the local industry.
According to experts, rates of coal in the global market have surged by over 30 percent, which has lifted the production cost of the several major industries including energy and cement sectors. Experts said that China's coal prices hit their highest levels at 650 yuan ($102.4) a tonne, fuelled by concerns over tight supplies and robust demand at utilities.
They urged the government to immediately review the issue of high duties on coal import. The industries that rely on coal as a source of fuel for production, such as energy and cement, are predicted to suffer heavily. The cement industry has also expressed its concern over sharp rise in coal and fuel prices, impacting the cost of production of cement.
According to industry experts, higher coal as well as fuel prices have decreased local cement industry's profit margin, as coal constitutes more than 30 percent to the total production costs. Experts said that coal prices have been gradually increasing for the last one year, when China, the world's largest coal producer, importer and consumer, imposed supply side measures to limit its coal mining capacity.
Experts suggested that the government should avoid disruptive policies that impact construction growth in the country.
Industry experts are of the view that because of the rupee depreciation and rising coal prices in the international market, the industry has no choice except to shift on the national grid which would cause additional burden on the power distribution companies, besides increasing cost for the industry.
Experts suggested that the government should avoid disruptive policies that impact construction growth in the country. They industry stakeholders asked the government to consider the requests of the local manufacturers to take steps for increasing exports through cut in cost of energy and fuel including coal.