LAHORE - More than 9 percent rupee depreciation against dollar and 5 percent import duty on coal have increased their rates to nine-month high of $103 per ton from $93 per ton, leading to increase in cost of production for the local industry manifold.

Experts said that China’s coal prices hit their highest levels at 650 yuan ($102.5) a tone this week, fuelled by concerns over tight supplies and robust demand at utilities amid frigid weather.

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 again shift on the national grid which would cause additional burden on the power distribution companies, besides increasing cost for the industry.

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 dampened local cement industry’s profits, 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, has imposed supply side measures to limit its coal mining capacity. Recent surge to the trajectory came from strict local rules on coal transportation which fueled coal imports.

Experts suggested that the government should avoid disruptive policies that impact construction growth in the country.