Muhammad Reza Ilham Taufani, CNBC Indonesia
Market
Tuesday, 08/08/2023 07:27 WIB
Photo: Unloading coal in China. (REUTERS/ALY SONG)
Jakarta, CNBC Indonesia – Coal prices closed higher at the start of trading this week. The driving sentiment for coal prices came from China, which again added a giant coal power plant with a capacity of 50 giga watts (GW).
Nevertheless, there is a sentiment that restrains the increase in coal prices. This is because high rainfall in some areas causes electricity demand to decrease.
Referring to Refinitiv, ICE Newcastle’s coal price for the September contract closed at US$ 144.25 per ton. The price is up 2.6%.
Since the start of the month, overall coal prices have appreciated, increasing 3.8% from US$138.85. Throughout the year, coal prices have corrected 62.9% from the initial US$ 389.6.
China is again the actor behind the soaring coal prices.
China’s label as the planet’s biggest polluter will only get stronger as China approves the construction of more than 50 GW of new coal-fired power plants in the first half of 2023, environmental group Greenpeace said.Oil Price.
“The Chinese government has made energy security and energy transition contradictory to each other. Beijing has clearly stated that coal power will still grow at a ‘reasonable pace’ into 2030,” Greenpeace’s Gao Yuhe told Reuters.
For information, China’s coal production increased 9% to 4.5 billion tons last year, more than half of the world’s total, and is expected to continue to increase this year.
A drought caused by a heat wave (heatwaves) making China have to prepare anticipation as an effort to offset the 22.9% decrease in hydropower (hydroelectric) production.
Heavy rains accompanied by typhoons that hit China disrupted a railway bridge, which transports about 40 million tons/year of coal, in the Jingxing area that was swept away by the floods.
Not only China, uncertain climate change also disrupts global energy uncertainty.
The Russian-Ukrainian war, which had disrupted supplies, caused Western Europe, North America, Austria, Poland, the Netherlands, Greece and many other countries to be unable to avoid dirty energy sources, coal.
Coal price sentiment will also depend on important data to be released today, namely the trade balance and China’s export-import level.
Launch S&P Commodity Insight, China is to release its main steel trade data for July. Exports are expected to decline slightly from June levels. The downward trend in exports is also expected to continue in August.
The decline in steel exports as an indicator of industrial growth will determine the direction of movement of energy commodities as a support. This has the potential to cause limited demand for coal so that coal prices can be depressed.
From India as the second largest coal consumer, the coal sector stated that it had completed the 7th phase of the coal block auction.
Six coal mines in four states were successfully auctioned. Two of the coal mines being auctioned have been fully explored, while the other four are partially explored, indicating huge untapped potential beneath the surface.
This shows the attractiveness of investors with the potential of Indian coal. The entry of this investment will potentially make India’s coal supply better, so that it will suppress imports.
With the successful auction of these six coal mines, the total number of mines auctioned under commercial auctions has now reached an impressive 92 mines.
From Europe, coal stocks continued to erode, hitting their lowest value in the last four months. The limited supply has also pushed up the price of natural gas which is a substitute for coal.
European natural gas prices EU Dutch TTF (EUR) broke psychological levels in the same direction as coal, shooting up 5.66% to 30.487 euros per mega-watt hour (MWh).
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