Coal prices climbed past its 10 year high level and reached US$112/ton (45% increase from Yearly average).
Coal prices have increased significantly in recent times due to revival in global economic activity as mass vaccination led to ease down of COVID related restrictions.
A significant portion of demand is induced from China due to decline in domestic coal production along with the ban on coal imports from Australia.
Moreover, average coal prices rose by 12% YoY in 11MFY21 as compared to average coal price of US$77/ton in 11MFY20.
This increase of US$35/ton in cola prices will directly lead to increase in cement prices by roughly Rs.40-45/Bag to pass on the impact of higher international coal prices on overall cement production.
High Coal Prices are also likely to impact Captive Power Plants being run on Coal and Coal based IPPs as their Merit Order will be impacted due to Higher cost of production.
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