Coal news and updates

Soft steam coal, pet coke lower ACC’s fuel costs

Taking advantage of the soft trend in steam coal and pet coke in the fourth quarter of the current fiscal, ACC Limited, one of the largest producers of cement in India, recorded a 12-quarter drop in fuel and power costs at Rs 908 per ton in the same quarter, according to information available with ICMW.

Sources said the fuel and power costs went down for ACC in Q4 because of lower prices of both steam coal and pet coke, which arrested a further fall in operating margins.

Fuel and power costs for the cement major had hovered around Rs 1,100 per ton in the third quarter (Q3) of the current fiscal and, on a year-on-year basis, in Q4 of fiscal 2014-15 had been at a little over Rs 1,000 per ton.

Where imported steam coal is concerned, the 5,500 Kcal/kg NAR variety has slid by over 30% to hover around $41.50 per ton at present against $53.25 per ton in March 2015 and $62.25 in the same period in 2014.

It may also be recalled that domestic and international pet coke prices had been easing since the last six months or so. As per ICMW’s own data, Reliance Industries Ltd (RIL), the biggest producer of pet coke in India, had cut prices by Rs 1,500 per ton in November 2015, by Rs 200 per ton in December and by another Rs 200 per ton for delivery in January 2016 to match their prices with the imported material.

The price of imported pet coke of US Gulf coast-origin also fell to about $55 per ton CFR India in October from a high of around $73 per ton in September while prices of Saudi Arabian-origin pet coke had declined to around $38 per ton from a high of around $50 per ton.

ACC’s present cement production volume is 6 million tons (mt). It takes 200 kg of coal to manufacture 1 ton of cement, as per industry calculations.

Meanwhile, revenues for ACC grew a mere 3% y-o-y to Rs 2,846 crore in Q4. However, despite poor demand in the eastern and northern regions, cement despatches were up 4% y-o-y. But realisations were down 3% q-o-q, owing to subdued demand in the east, north and south, sources said.