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Motilal Oswal Report
There has been a substantial increase (up 75%/52%) in South African/Australian coal prices in the last one month (40-50% increase in two weeks).
At present, imported coal prices are significantly higher than their peak in October 2021. Petcoke prices too have started to rise. Reliance Industries Ltd. raised petcoke prices to Rs 17,980/tonne for March 2022.
There will be a further increase in domestic/imported petcoke prices as cement companies would want to maximize the usage of petcoke.
Operating cost/tonne for the cement industry increases by Rs 41-52/tonne for every $10/tonne increase in petcoke and imported coal prices. The industry will have to raise prices by ~Rs 3/bag to offset the impact of a $10/tonne change in the coal/petcoke prices.
In the current volatile pricing scenario for imported coal and changes in the global geopolitical scenario (Russia-Ukraine standoff), it has become difficult to analyse the earnings impact on cement companies.
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