Business Daily from THE HINDU group of publications
Wednesday, Sep 17, 2008
ePaper | Mobile/PDA Version | Audio
Business Daily from THE HINDU group of publications Wednesday, Sep 17, 2008 ePaper | Mobile/PDA Version | Audio |
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Markets
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Stocks Industry & Economy - Cement
The recent fall in coal prices may bring some relief to the margins of cement companies, compared to the preceding quarters. Having taken cues from falling oil prices, global coal prices have corrected by 23 per cent to $150/tonne levels, tracking crude oil, which has dipped 30 per cent from its highs in July. From the record high of 195$/tonne, thermal coal prices have come down to 150$. However, coal prices continue to hover well above levels in the same time last year (about $70/tonne). Fuel costs to wither The cement industry’s coal consumption is on a steady rise (9 per cent annually in the last four years) with coal accounting for nearly 15 per cent of the total expenditure of the cement companies. With coal prices having doubled since last year, cement manufacturers reported shrinking operating profit margins in recent quarters, especially as their end prices were pressured by regulatory measures to contain inflation. 
The current correction in coal prices have tracked similar trends in crude oil which, after touching a peak of $147/barrel on July 11th, has drifted down to present levels of $93. Falling oil and gas prices, which have resulted in a shift in usage from coal to the former, have moderated coal prices. Falling oil prices could also cut freight costs, anther key element of cost for cement producers. North-based cement producers, which couldn’t pass on input cost increases to the consumers, could be the key beneficiaries of this trend of cooling input prices. More Stories on : Stocks | Cement | Coal
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