Jakarta, CNBC Indonesia – Coal prices have fallen further this week. According to Refinitiv data, ICE Newcastle (Australia) benchmark coal price for April contract on Monday (21/3/2022) closed at US$ US$220.60/ton, down 8.08%.
The decline was much deeper than Thursday (0.81%) and Friday (5.08%). Coal price at Monday’s closing was also the lowest since February 21 (US$ 209.35/ton) or in the past month.
In a week, the price of coal has fallen 27.3% although in a month it is still up 5.4% and 124.2% in a year.
The continued decline in coal prices was caused by the belief that the supply of black gold was safe after China and Australia issued new policies.
Beijing has asked energy companies to increase their coal supply to avoid further pressure from soaring energy commodity prices.
The National Development and Reform Commission (NDRC) asked the country’s power plants to sign long-term supply contracts with local miners. Minimum supply for 15 days. The policy is effective since Friday (18/3).
Mining companies are also asked to offer 80% of their production contracts through long-term contracts at prices determined by the government.
Local governments are asked to oversee all transactions and contracts to prevent fraud and ensure policies run according to regulations.
The Chinese government has determined benchmark Coal prices were at 570-770 yuan (US$90-121/ton), higher than the previous 500-570 yuan.
For the record, during January-February, China produced 686.6 million tons of coal, up 10.3% over the same period last year.
Meanwhile, the Australian government promised to donate 70,000 tons of their thermal coal to Ukraine to meet the country’s energy needs.
Australia will also send coal supplies to other countries such as Poland, which has been depending on Russia for their coal imports.
“The Australian Government has been working closely with the coal industry players to meet supply,” the Australian government said in a statement Reuters.
Coal prices had soared after Russia attacked Ukraine on February 25. The price of black gold jumped quickly from US$251.50 to US$400. Coal prices hit a record high on March 2 to US$446 tons and stayed in the range of US$400 until March 9 (US$ 426.85/ton). However, after that the price went down.
Previously, Energy Watch Executive Director Mamit Setiawan said the decline in coal was also due to the largest importers such as China increasing their domestic production in order to reduce their coal imports. The price that soared too high in early December was also the reason for the drop in the price of black gold last week.
“So, demand-decreases with domestic production and demand. This certainly puts downward pressure on prices due to reduced demand. In addition, yesterday’s price was also very high and made the market saturated,” said Mamit, to CNBC IndonesiaSunday (20/3).
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