India’s petcoke ban to benefit Pakistani Cement industry
The recent ban on the use of petcoke in India’s National Capital Region (NCR) is expected to have beneficial impact on Pakistan’s cement industry.
While it is predicted that fuel and power costs could rise as world coal prices rise due increased demand from India, the Pakistani cement industry expects to increase its exports to India due to a better competitive position.
“The Pakistani cement industry could expect two major implications in the aftermath of the Supreme Court’s decision in India. First, it is expected that fuel and power costs would rise as global coal prices could see upward pressure due to incremental demand from India. Secondly, there could be an opportunity for Pakistan to increase its cement exports to India due to the potential increase in Indian cement prices on account of switching from pet coke to expensive coal,” Insight Securities Chief Financial Analyst, Zeeshan Afzal, said.
In FY16-17 Pakistan exported 1.3Mt of cement to India. As the impact of the petcoke ban is expected to be more severe on cement companies in northern India due to their higher dependence on coal, Pakistani players are anticipated to particularly benefit from the ban. However, this depends on whether Indian cement companies pass on the impact of increased costs to the consumers of their product.