Jakarta, CNBC Indonesia – The price of coal has finally risen after falling last week. In trading on Monday (14/11/2022), the December contract coal price on the Newcastle ICE Market was recorded at USD 309 per tonne. Black sand price strengthened by 3.2% from last week’s last trading on Friday (11/11/2022).
Today’s strengthening brought black sand back to the US$300 per ton level. Within a week, coal prices are still down 7.6% on an ongoing basis point to point. In the last month the price of coal also fell by 22.3%, but in one year it still jumped by 112%.
The renewed increase in coal prices was supported by natural gas (LNG) price movements in Europe. Gas prices have risen due to problems with shipments from Norway and forecasts of colder temperatures in Europe this week.
The price of Dutch EU TTF natural gas (EUR) jumped to 113.70 euros per megawatt hour (MWh) yesterday. The price has gone up 16% per day.
Reported by Bloomberg, Weather forecasting agency Maxar Technologies LLC expects European temperatures to plummet this week. The temperature in Berlin, Germany is expected to be even below 0 degrees Celsius. With lower temperatures, residents are encouraged to use the heaters.
Previously, the Copernicus Climate Change Service predicted that the 2022/2023 winter climate would be warm. This condition will reduce energy consumption.
The gas price hike was also triggered by the outage of two Norwegian-owned gas plants in Asgard. The facility stopped operating after suffering a fire on Sunday (11/13/2022).
It is estimated that the new facility will be able to operate on November 19 at the latest.
“The outlook for a warmer winter has reduced gas demand by 20% of normal. However, there is uncertainty around the supply of LNG. This can be a positive (for gas),” said the analyst at Deutsche Bank AG, quoted by Bloomberg.
Rising gas prices help coal not sink too deep. The price of black sand fell 14% last week on a series of negative sentiments ranging from the threat of recession, weak demand and adequate supply.
Weak global demand came mainly from China. Imports from China have plummeted this year due to the economic slowdown and insufficient production.
Beijing’s coal production reached 3.32 billion tons in January-September 2022, an increase of 11%. This increase in production has caused the coal supply at their power plants to reach 170 million tons, as of September.
Meanwhile, president of Mitsubishi Heavy Industries Seiji Izumisawa reminded Asian countries not to rush towards all-renewable energy. The transition from fossil energy to renewable energy must take place gradually.
According to him, discussions about energy use are now no longer divided between those who use current technology and those who support renewable energy.
“However, the current discussion is how best to use the energy mix. You are not only thinking about renewable energy but also using existing resources such as LNG and coal,” he said on the sidelines of the B20 meeting in Bali, quoted by Reuters.
CNBC INDONESIA RESEARCH TEAM
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