Soaring coal prices to catapult India's import bill

Russian military operation in Ukraine is bringing turbulence in supply-chain process across the globe. The heightening tensions between Ukraine and Russia is likely to have a bearing on the supply of thermal coal, while direct or indirect sanctions from the western countries are also expected to put upward pressure on its prices.

According to a research analyst, Rajnath Yadav, there can be two factors of price rise in the international market. First, there is an anticipation of a lower supply of coal in the global market leading to the increased prices in the international market amid the war. The price rise of alternate fuels like crude and natural gas prices may be the second reason.

According to Manoj Kumar Jain of Prithvi Finmart, a rise in international coal prices would increase import bills, thereby widening the country’s trade deficit and higher coal prices are having direct linkage to inflation as rising energy prices impact industrial and processing costs.

Currently, international coal prices are at their lifetime high at above USD 400 per tonne.