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Pakistan shifts to sea-borne coal as Afghan coal price soars

AT News

KABUL – Coal consumption landscape in Pakistan is changing as Pakistanis are now shifting towards imported coal from various sources, as Afghan coal price has surged exponentially this year.

Data from the Pakistan International Bulk Terminal Limited reveals a decline in coal imports from Afghanistan, accompanied by a substantial increase in imports from alternative origins. In the first 16 days of January 2024, the terminal recorded a remarkable coal handling volume of approximately 493,000 tons, marking the highest half-month coal shipments in the past two years.

The surge in coal imports is primarily attributed to the slowdown in Afghan imports and the favorable pricing of Richard Bay coal, which stood at around $98 per ton in January 2024, compared to $116 per ton in the second quarter of the fiscal year, as reported by brokerage firm Sherman Securities.

During the first half of the current fiscal year, PIBTL managed around 1.9 million ton of coal, with an estimated 1.8 million ton handled in the second quarter alone. The report attributes this upward trend to the cost-effectiveness of imported coal and the appreciation of the rupee against the dollar. PIBTL charges approximately Rs2,000 per ton for coal unloading at Port Qasim, with upcountry coal transportation via trucks incurring costs ranging from Rs 6,500-7,000 per ton.

Sherman Securities noted, “We believe that imported Richard Bay coal costs around Rs40,000-41,000, while Afghan coal is trading between Rs 50,000-52,000, up 25 percent versus Richard Bay. This price difference will lend more support to imported coal, potentially increasing the coal handling capacity of PIBTL.”

Presently, it is estimated that 70 percent of the coal demand for cement companies is met through sea-borne coal via PIBTL, particularly following the recent border issues with Afghanistan that disrupted the land route for coal trade.

PIBTL’s handling margin, after covering port charges and other associated costs, stands at around $4 per tonne for every cargo it handles. Given the current scenario of higher Afghan coal prices and trade restrictions, PIBTL is playing a crucial role in managing the majority of the imported coal for cement plants.

In the first quarter of FY24, the company reported a net profit of Rs580 million, a significant improvement from the Rs440 million loss recorded in the same period last year. The gross margin also witnessed a notable increase, reaching 40 percent during the first quarter, compared to 28 percent in the corresponding period last year. Sherman Securities anticipates that the company will post an earnings per share of Rs1.5 in FY24, driven by the rising coal handling and reduced exchange losses.

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