Recent geopolitical tensions have upended the already tight coal market and have sent coal prices to their all-time highs. Currently trading around USD426/ton, we do not expect them to hold their current ground for a long time and expect a retraction towards the range of USD200-250 in 1-2 months.

· Current prices of coal have forced local players to move towards other sources where Afghan coal has taken a lead and some of the players in Northern region are utilizing upto 70% of Afghan coal in their fuel mix. However prices of Afghan coal are on an upward journey as well have increased by PkR12-15k/ton in last 15 days.

· Situation in South is trickier as Afghan coal is not currently being utilized where the players in the region have stopped taking export orders currently due to low prices of clinker while they also prioritize local market in a bid to improve longevity on current stock of coal.

· With sky rocketing prices of coal, longevity of operations on current stocks is of paramount importance as availability of Afghan coal is limited while supply chain reliability also remains low. We expect further price increase in North and South both as players look to pass on the impact of coal prices.

· We continue to prefer LUCK, MLCF and FCCL from our universe with low leverage on the balance sheets allowing them to survive in tough times where cost efficiencies for LUCK and MLCF provide further impetus.

Courtesy – AKD Research