By Muhammad Mudassar ISLAMABAD, April 14 (INP-WealthPK): Cement factories in the north of Pakistan have largely shifted to a combination of Afghan coal, which is 40% to 45% cheaper, as record-high world markets are making imports too costly for the industry to remain profitable. Another reason for the cement factories to shift to the Afghan coal is the rise in the prices of alternative fuels like crude oil and natural gas. Fuel accounts for approximately 50-60 percent of the cost of cement production. The ongoing tension between Russia and Ukraine has disturbed the global fuel market, with poor economies like Pakistan heavily dependent on imported fuel suffering the most. Owing to the recent hike in coal prices, the cement industry is facing the issue of coal shortage. In the past seven months, coal prices have increased to $235 per ton. In August 2021, coal's global price was $140 per ton, which has now increased to $375 per ton. In Asia and Australia, the supply has already tightened due to Indonesia’s ban on coal export and heavy rainfall in Australia. If the ongoing Russia-Ukraine conflict exacerbates and more direct and indirect sanctions are imposed, then the coal prices may shoot up to $480-$500 per ton. Previously, the Afghan coal used to trade at 25-30 percent lower than the benchmark Richard Bay, but currently this discount differential has jumped significantly, as the Afghan, as well as local coal, is currently trading at $200-$170/tonne approximately. As per industry experts, the majority of the northern players have landed the cost of closing inventory at Rs27,000-31,000 per tonne for approximately 70 days of inventory being held, having 4-5 months of coal inventory in hand. Imports from Afghanistan rose to around 500,000 tons a month from zero last summer, and it now makes up 70% of the supply for some factories in the north of Pakistan, according to Maple Leaf Cement Factory Ltd. Afghanistan is ramping up production, but the trade is still disorganized, Maple Leaf Chief Financial Officer Mohsin Raza Naqvi said in a briefing in March. Manufacturers pay for the coal in local currency and then the Afghan traders use the money to buy goods like wheat and meat from Pakistan, he said.