Rating agency ICRA on Thursday said it expects prices of domestic coal to remain high in the ongoing quarter as well given the supply challenges of the dry fuel during monsoon.
The domestic e-auction premium on coal increased by over 400 per cent in May, thereby adversely impacting the cost structure of the base metal companies and margins.
"Going forward, given the coal supply challenges during the ongoing monsoon season, the rating agency expects domestic coal prices to remain elevated in the current quarter as well," ICRA said in a statement.
Power cost, it said, has risen substantially for domestic base metal companies, owing to lower availability of linkage coal to non-power sectors and elevated coal prices in both international and domestic markets.
"The elevated coal cost remains a near-term concern," Jayanta Roy, Senior Vice-President and Group Head, Corporate Sector Ratings, ICRA said.
Metal prices, it said, will remain under pressure in the near term owing to weakening global demand.