The Alkali Manufacturers' Association of India (AMAI) said that the recent increase in coal prices of up to 190 per cent will have a damaging impact on costs for caustic soda and soda ash producers in the country. The price increase came into effective from February 27.

While making the industry non-competitive in the global space, it will also lead to increased prices for all manufacturers who use caustic soda as a raw material and hence will contribute to higher inflation. Industries using caustic soda include aluminium, pulp and paper, textiles, soaps and detergents.

“Coal India (the largest domestic coal miner) has increased price of coal ranging from 30 per cent to more than 190 per cent, depending upon the grade used. This will have an impact of about Rs 4,000/tonne of caustic soda production. We have been given to understand that this price hike of coal will not apply to the independent power plants but the captive plants have not been exempted,” said a statement from the industry body.

It added that for the chlor alkali industry, power constitutes 60 per cent of cost of production. For production of caustic soda, about 2,800 units are consumed for each tonne. Because the grid is unreliable, most units have installed their own coal-based captive power plants in order to get uninterrupted power supply at a reasonable cost.

AMAI said that the price of fuel is lower in the neighbouring countries, so the industry there can benefit from cheaper rates of power. “These countries will export their caustic soda in large quantities to India and may also dump. This will result in making the Indian industry non-competitive and some of the units may also close down,” it said.

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