Coal prices in the country are likely to register an increase as China has cut its coal exports by 10 million tonnes per annum. This will also put pressure on cement prices in the local market. This was stated by Najib Balagamwala of Seatrade, which arranges sea transportation of coal, iron ore and wheat for the country.
He said that currently China exported 90 million tonnes of coal, which would be reduced by 10 million tonnes annually.
He said that amongst the world's largest coal suppliers, position of South Africa was already tight while countries like Pakistan would approach Indonesia to meet its coal requirements increasingly being used by the cement factories as an alternate fuel after rise in oil prices.
Many cement factories, which have lately shifted to coal from furnace oil for their production, had made plans to switch over to gas to meet their fuel requirements. A few new cement factories would further worsen the coal supply position.
He estimated that the coal requirements of the cement sector would jump to 2.5 million tonnes per annum in 2006 from 1.6 million tonnes.
Najib, who recently visited China to discuss the future prospects of coal import, said that the coal prices had already been increased by 50-dollar a tonne by South Africa, 40 percent by China and 36 percent by Indonesia during the last two years.
The significant increase in freight rates would make the coal imports expensive, which would further add to the commodity prices in the country, he added.
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