Global coal price rise hits cement factories

DUBAI - A rise in the international price of coal, used in the cement manufacturing process, is adversely affecting local cement manufacturers.

By Sandhya D’mello

Published: Fri 27 Aug 2004, 11:55 AM

Last updated: Mon 13 Nov 2023, 3:01 PM

Global prices for coal, have registered a 14 per cent increase in last three months, with prices soaring to $90 per tonne (delivered at plant) against $77 per tonne earlier.

The increase in the coal prices is mainly attributed to a shortage of physical stocks in global market. The current price is a 55 per cent increase over last year’s when prices were hovering around $40 per tonne (delivered at the plant).

Coal is essentially used by two prominent factories in UAE, Gulf Cement and Fujairah Cement. Local coal importers are of the opinion that hike in freight rates coupled with increase in fuel prices have aided the hike in coal prices.

Freights are expected to stay high in 2004 with the Pacific market being tight and Atlantic softer, shipments from the East are expected to shrink.

Sources said that the acute shortage of coal in the global market is mainly due to China’s ban on exports of steam coal. Besides China, US, India, Australia, South Africa, Russia, Poland and Indonesia are the prominent suppliers which dominate world trade.

China has banned the exports of steam coal due to rise in their local demand. Also, mines in China had suffered due to heavy rains and floods which affected local production and hence the shortage physical stocks of steam coal. Also China’s local consumption has also moved up and hence exporters are finding it difficult to cater to the local demand as well as the export orders and hence the ban on exports of steam coal.

According to a research paper presented by an international expert David Price of The McCloskey Group, steam coal is one of the fastest growing commodity trades and growth has been driven primarily by the demands of the power sector, with new power station building in Asia and domestic coal being replaced in Europe and, very recently, the US. The major producers today include China which produces 1,320 tonnes per year, US at 917, India at 334, Australia at 276, followed by South Africa at 223, Russia at 164, Polland at 103 and Indonesia at 101 tonnes per year.