KARACHI, Nov 30: International coal prices have gradually eased off. And in the week ending Nov 26, they stood at $51.82 per ton, sharply down from its record high of $70.95 per ton on June 25 this year (quoted on FOB basis from South Africa).

Prices of coal had escalated on account of an increase in other energy products, especially crude oil. Higher demand of coal due to sky-rocketing crude oil prices, reduction in production of coal by certain countries (especially China and India) led to the increase in prices.

Fariha Tayyab, analyst at Global Securities, said that the local cement manufacturers were adversely affected by the hike in coal prices as energy costs constituted approximately 60pc of total manufacturing costs. And coal was a significant component.

Moreover, after taking duties, freight and transportation costs into account, the current cost of international coal worked out at Rs5,370 per ton, which was 15pc less than the average coal cost during 1Q'05.

However, on a y-o-y basis, current prices were said to be still significantly higher. In Nov'03, average coal prices were $37.3/ton, compared to current prices of $51.8/ton in Nov'04 (40% higher on a y-o-y basis).

Majority of the cement manufacturers use a mix of furnace oil and coal to heat their kilns and an upsurge in both energy products had increased production costs and squeezed EBITDA margins. Going forward, market expected coal prices to stabilize around $45-50/ton, which would still prove to be a relatively expensive source of energy, when compared to its prices a year ago.