Pakistan turns to sea-borne coal as Afghan high cost imports dry up

KARACHI - The coal consumption sector has shifted to imported coal from other countries, as the prices of coal from Afghanistan have soared in recent months, industry data showed on Monday.

The Pakistan International Bulk Terminal Limited (PIBTL) data showed a slowdown in coal imports from Afghanistan and a growth in imports from other sources. According to PIBTL's data, the terminal handled a record coal of around 493,000 tonnes in the first 16 days of January 2024, the highest half-month coal shipments in the last two years.

"The increase can be mainly attributed to the slowdown in Afghan imports and lower Richard Bay coal prices, which were nearly $98 per tonne during January 2024, as compared to $116 per tonne during the second quarter of this fiscal," said report by brokerage Sherman Securities.

PIBTL handled around 1.9 million tonnes of coal during the first half of this fiscal year, while it is estimated that the company handled around 1.8 million tonnes during the second quarter. The report attributed the rising trend to the cheaper imported coal, along with the appreciation of the rupee against the dollar. PIBTL charges around Rs2,000 per tonne for coal unloading at Port Qasim, while upcountry coal transportation via trucks costs around Rs 6,500-7,000 per tonne.

"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 of PIBTL," the brokerage said.

Currently, it is estimated that 70 percent of the coal demand for cement companies is being met through sea-borne coal via PIBTL, after the recent border issue with Afghanistan, which disrupted the land route for coal trade.

PIBTL's handling margin, after paying port charges and other allied costs, is around $4 per tonne on every single cargo it handles. Currently, due to the higher price of Afghan coal and

trade curbs, the majority of imported coal for cement plants is being handled by PIBTL.

During the first quarter of FY24, the company posted a net profit of Rs580 million, as compared to a loss of Rs440 million in the same period last year. The gross margin remained at 40 percent during the first quarter, as compared to 28 percent in the same period last year. "We believe the company will post an earnings per share of Rs1.5 in FY24, on the back of rising coal handling and lower exchange losses," the brokerage house said.