Jakarta, CNBC Indonesia – Coal prices have skyrocketed this year. The increase had broken the highest record since 2008 at US$ 280/ton on Tuesday (5/10/2021) last week.
In other words, at that highest level, the black stone had ‘skyrocketed’ to 230% so far this year.
Inevitably, with this surge, no other commodity experienced a price increase as sharp as the black stone.
After breaking this record high, Coal prices ‘freefall’ as investors take profit.
As of last weekend, the price of stone was at US$ 225.75/ton. When asset prices soar, the risk of falling becomes very large. In the case of new embers, that’s exactly what happened.
Despite the slump, in the past month, coal prices rose 32.39% point-to-point. Meanwhile, since the end of 2020 (year-to-date), the price skyrocketed by 191.93%.
The recent surge in coal was supported by dwindling supplies amid increasing demand due to the opening of economic activity. Rising oil and natural gas prices also affected the performance of coal, which recently recorded an all-time high price.
The increase in natural gas prices, indeed, is the main factor in the surge in coal prices. As natural gas becomes more expensive, the incentive to turn to alternative primary energy sources increases. One of them is coal.
Toby Hassall, an analyst at Refinitiv, said that currently, both supply and demand for coal have recovered after being hit by the coronavirus pandemic.Coronavirus Disease-2019/Covid-19). In the future, with demand that has returned to its pre-pandemic period, the lure of high profits will make producers compete to increase production.
“We expect this supply growth to create price pressures in the medium term,” Hassall said in his research.
Indeed, compared to hedging assets such as gold, coal remains successful.
According to Refinitiv data, the price of gold in the spot market fell 7.60% year to date (ytd) to US$ 1,753.76/troy ounce this morning, Monday (11/10) at 07:03 WIB.
Gold prices are indeed sluggish this year, in the midst of dynamics the exchange rate of the United States (US) dollar and the issue of reducing asset purchases aka tapering off by the US Federal Reserve (The Fed).
Nah, then, what assets can beat coal’s good report card this year?
NEXT: Which Asset Outperforms Coal?
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