Rising international coal prices could affect the domestic market

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Huge demand for coal in China has had a butterfly effect that can reach Bangladesh’s construction, clothing and power generation industries as the much-demanded fossil fuel becomes more expensive in the markets. global.

International coal prices have climbed by around 70% per tonne over the past year, as demand for fuel has increased as part of the global economic recovery.

As a result, the cost of domestic and foreign coal used for industrial or personal purposes has increased.

Bangladesh is entirely dependent on imports for its annual needs of around 80 lakh tonnes of coal, 70 percent of which is used by brickyards while the rest goes to garment makers and the power sector, according to Falah Uddin Ali Ahmed, a major importer of coal.

At best, there are only 10 or 12 companies, including traders Partex, Bashundhara, Akij and Uttara that import coal from Australia, Indonesia, India and South Africa.

And setting aside the ripple effect of China’s ban on Australian coal, the situation worsened when environmentalists barred coal imports from India for about eight months.

“Thus, the price of coal in Bangladesh has increased as a direct result of impacts on international markets as well as higher freight costs in the context of the ongoing pandemic,” said Ahmed.

So the price of coal has reached $ 120 a tonne now, down from around $ 70 a tonne just a year ago.

Likewise, the price of coal in local markets has risen to around 18,000 Tk per tonne, compared to 8,000 Tk at the same time last year.

The major coal importer went on to say that it was impossible to reduce prices given the current market climate due to geopolitical tension between Australia and China stemming from the latter’s reluctance to allow an investigation. on the origin of Covid-19.

Mr. D. Shahidullah Azim, vice chairman of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said the impact of rising coal prices would be insignificant for garment makers as it is not a key ingredient for the industry.

Mizanur Rahman Babul, president of the Bangladesh Brick Manufacturing Owners Association (BBMOA), said that since the brick-making season started next month, they have not yet determined whether the increase in the international price of coal will have an effect on the industry.

Babul predicts that brick prices will increase by 1,000 Tk per thousand units if coal prices do not fall before the plant reopens.

Referring to data from BBMOA, he said Bangladesh needs around 1,500 crore of bricks per year for various construction projects.

And as if China hadn’t done enough by moving away from Australia, the world’s largest coal consumer has said it will pay any price for fossil fuel, a move that threatens to starve countries the least rich in their energy needs.

As winter approaches in the northern hemisphere, natural gas prices have hit record highs, leaving countries around the world in a rush for some of the limited coal supply.

And at the center of that dust is of course China, where stocks are low amid unprecedented demand for construction and power generation.

Meanwhile, coal use in the European Union is expected to increase this winter due to declining renewable energy production, record natural gas prices and the planned shutdown of nuclear reactors.

The foreseeable impact will surely hit brickyards in Bangladesh, as the costs of firing bricks will likely rise alongside spending on imported coal, which has almost doubled from last year.

Most of the country’s brickyards and other industries use imported coal as fuel for industrial purposes or for power generation.

According to traders, Indonesian coal is now widely available in the country.

Yesterday, speaking to the Daily Star, various brickyard owners in Dinajpur said they mainly use Indonesian coal, but amid a disruption in the global supply chain caused by Covid-19 last year, they used local sources from Dhaka and Noapara from Jessore.

On condition of anonymity, the director of a charcoal importing company in the region said prices had risen in the international market since September of last year.

In 2020, his company produced a ton of coal for between $ 55 and $ 60 but this year they have to pay around $ 117 to $ 120 for the same amount depending on the quality.

Shafiqul Islam, owner of a brickyard in the Parbatipur upazila in Dinajpur, said he was sourcing coal from the Barapukuria Coal Mining Company in the Parbatipur upazila in Dinajpur for a few years.

However, the state-owned coal producer stopped supplying brickyards after the 2018 coal scam involving the diversion of around 145 lakh tonnes of fuel.

“Still, Barapukuria’s charcoal was better than imported charcoal,” he said.

Islam needs around 670 tons of charcoal to bake bricks each season. Last year he spent Tk 2 crore to procure coal at Tk 8,000 per tonne.

“However, the price went up at the end of the season, when I had to spend Tk 5.5 crore for the same amount,” he added.

Bisu Agarwala, owner of another brickyard in Dinajpur sadar upazila, said coal imports from India were slowing because the rates are so high.

“An importer recently bought 100 tonnes of coal from India via the land port of Sonahat in Kurigram at a cost that was far too high,” he added.

In an interview with The Daily Star, many brickyard operators said the government should take action to get the Barapukuria Coal Mining Company to produce more coal to support local demand. The coal processing plant can produce around one million tons of coal per year.

If the price of imported coal remains at current levels, brickyard operators will have to turn to alternative sources of fuel for production which could be even more harmful to the environment.

For example, wood and bamboo are preferred alternatives, they said.


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