Jakarta, CNBC Indonesia – Coal prices have skyrocketed this week and are approaching record highs. On Tuesday’s trading (17/5/2022), the price of coal on the ICE Newcastle (Australia) market for the June contract closed at US$ 399.65 per ton. Up 5.8% compared to the previous day’s close.
This price level is the highest since March 9, 2022, or more than the last two months at which time the price of coal touched US$ 426.85 per ton.
Yesterday’s increase also brought the price of black gold to near the level of US$ 400 per tonne and its highest price at US$ 446 per tonne on March 2, 2022.
For the record, the Russo-Ukrainian war that began on February 24, 2022, catapulted coal prices from around US$ 250 per tonne at the end of February to around US$ 400 per tonne.
However, the price level in the range of US$ 400 only lasted a week (2-9 March 2022), except on March 3, 2022. Coal prices then weakened again and moved below US$ 300 per ton before rising again due to sanctions against Russia and the crisis. electricity in India.
In two days, coal prices have shot up 10.5%. Overall, in the week, coal prices rose 11.9% overall point to point. In a month, the price of black gold is also still up 24.9% and in a year rose 301.5%.
The fast movement of coal prices is still triggered by supply concerns. India is still struggling with supply issues after a surge in electricity demand following the heat wave.
A number of countries that have decided to ban imports of Russian coal, such as Japan, are accelerating inventories so that supplies are tight again. On the other hand, the United States as the main producer is not expected to be able to take advantage of the large demand because it is facing shipping and labor problems.
Reported from S&P Global, Japanese companies and utilities are accelerating coal imports from alternative suppliers such as Australia.
Australia is the main choice because the coal produced from that country is included in the category of high quality required. Coal from Vietnam and Indonesia is considered not to meet these requirements.
Japanese steel companies have been depending on the supply of certain types of coal to Russia. In 2021, Japan will import 12% of its thermal coal needs and 8% of coking coal from Russia.
Meanwhile, the United States (US) as one of the largest producers is facing problems in shipping, labor, and difficulties in finding investment. This condition makes it difficult for the US to sell their coal in the midst of a large supply.
“The ability of US companies to take advantage of high coal prices is constrained by logistical barriers,” said Ted O’Brien, of Oluma Resources, a company that markets coal from Pittsburgh. mining.com
Last week, the United States Energy Information Administration (EIA) estimated that United States (US) coal production would reach 598 million short tons or 542.49 million tons in 2022. This number is 3% higher than 578 million short tons or 524.35 million tons in 2021.
However, US coal exports are expected to stagnate. US coal exports this year are expected to reach 86 million short tons, from 85 million short tons in 2021. The export projection for 2022 issued this month is even 3.7% lower than the forecast in April.
During January-March, US coal production increased 3.8% to 203.7 million tons, but exports did not show an increase. Coal shipments from the US in the first quarter of this year even fell 2.5 percent to 20.2 million tons.
CNBC INDONESIA RESEARCH TEAM
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