Business

War impact on coal: High global prices may lead to domestic crunch

A sharp uptick in international and domestic coal prices due to the ongoing Russia-Ukraine conflict is set to impact import-dependent power producers as well as steel, cement and aluminium producers.

Icra has estimated that imported coal prices are set to rise 45-55 per cent in the first quarter of the upcoming fiscal as non-Russian coal supplies would not be able to compensate for the shortage in Russian supplies of coal. It added a coal shortage was likely unless Coal India is able to ramp up domestic coal production to 700 million tonnes in the next fiscal, up from about 601 MT in FY21.

Price of Australian coal for March delivery hit an all-time high of about $330 per tonne. Price of domestic coal has also risen sharply in spot e-auctions conducted by Coal India Ltd, with premiums over baseline prices set by Coal India reaching an all-time high of 270 per cent in February, which have reportedly risen to about 300 per cent in March.

A shortage of domestic coal stocks at thermal power plants had last year led to rolling power cuts across states and forced discoms to procure power from exchanges at record high prices.

“… steel companies may be able to pass it on to consumers. They generally try to absorb it when there is not enough demand but when the demand increases they tend to pass it on,” said DK Pant, chief economist at India Ratings.




Source link

The Press Walla

The Press Walla is the India's fastest growing youth online magazine which covers all latest trending stories from entrepreneurship, business, entertainment etc

Related Articles

Leave a Reply

Your email address will not be published.

Back to top button