Jakarta, CNBC Indonesia – Coal prices are flying again. On Tuesday (9/8/2022), the price of September contract stone on the Newcastle ICE market closed at US$ 375 per ton. Coal prices shot up 4.02% compared to the previous day.
Yesterday’s gain extended the positive trend of coal which had been going on since Monday this week after collapsing in the previous week. In the last two days, coal prices soared 8.15%.
Overall, coal prices still shrank 0.94% in a week overall point to point. Within a month, the price of coal also fell 9.75%.
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The strengthening of coal prices was supported by a number of factors, ranging from the imminent start of the European Union embargo on Russian coal and high demand. As is known, the European Union will ban imports of Russian coal starting today, Wednesday (10/8/2022). The embargo is part of economic sanctions over Russia’s attack on Ukraine.
Alexandra Alatari, shipping analyst at Braemar Shipbroking, said that the start of the Russian coal import embargo marks a new era in global coal trade. Trading traffic will change from and headed for Europe.
The country’s thermal coal exports, led by President Vladimir Putin, reached 187 million tons last year, or about 20% of the total world trade. A total of 60 million tons of Russian coal are exported to Europe and Japan which will also ban imports of coal from Russia. The embargo is expected to make Russian coal exports rush to China and India.
Meanwhile, Europe will import coal from Australia, Colombia, the United States, Australia, and in small quantities from Asia such as Indonesia. However, he warned that the increase in imports from Asia will likely experience a slight obstacle related to infrastructure so that it will have an impact on prices.
“In the future, we will see a significant diversion of exports. Coal producers are currently unable to increase production quickly so supply is limited. This makes the European Union have to pay a higher price for imports from Asia,” said Atalari, to TradeWinds.
Coronado Global Resources Finance Director Gerhard Ziems estimates that price increases are expected to persist in the next few weeks. “There’s a possibility lagging (between the embargo and the impact on prices). The effect will not be immediate. It’s likely to be felt in September,” Ziems told The Australian.
Meanwhile, coal demand from Europe is still increasing. In addition to the embargo, the increase in demand occurred due to the increasing air temperature on the Blue Continent which made the use of electricity increase.
European countries such as Germany are also pursuing an increase in supply as they will restart their coal-fired power plants. Head of Importers Association BGerman coal (VDKi) Alexander Bethe said Germany’s coal imports are likely to rise sharply next month. However, the ever-shrinking surface of the Rhine could disrupt shipping traffic from major European ports.
“VDKi estimates that export volumes will increase sharply on a monthly basis starting from September,” Bethe told Reuters. Bethe estimates that coal imports in September could jump 50 percent higher than the 2.35 million tons recorded in May.
Germany’s coal imports for electricity use are estimated to reach 32 million tons this year, up from last year’s 27 million tons.
CNBC INDONESIA RESEARCH TEAM
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