Jakarta, CNBC Indonesia – The price of Newcastle thermal coal this week has rebounded and is trying to approach the psychological level of US$ 400/ton, amidst the ongoing heat of the Ukraine-Russia conflict which has triggered gas shortages and increased demand for coal.
On Friday (22/7/2022) the price of the most active coal futures contract in the New Castle market closed jumping 6.3% to US$ 399.05/ton. Throughout the week, the closing position jumped 4.88% compared to last weekend’s position at US$ 380.5/ton.
However, please note, last Friday’s closing level is still far from the highest record so far this year at US$ 446/ton (2/3/2022) even though this month coal prices have jumped 8.16% from the position at the end of May at US$ 410.1/ton.
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However, throughout the quarter, the price of black sand has strengthened 58.76% from the position at the end of March at US$ 251.35/ton. Throughout the current year, the price of coal is still considered to be distributing the maximum cash by rising to 162.97%, from the closing position in December last year which was US$ 151.75/ton.
The trigger for the surge in coal prices is still the lack of gas supply in Europe due to the protracted Russia-Ukraine conflict. As a result, European countries were forced to reactivate their Steam Power Plants (PLTU).
Director of Coal Business Development at the Ministry of Energy and Mineral Resources (ESDM) Lana Saria recently said that Germany asked for coal supplies from Indonesia.
Of Germany’s coal needs in 2022 of 31.5 million tons, half of which is planned to be supplied from Russia. However, due to the war between Russia and Ukraine, Germany closed imports of Russian coal as part of European Union (EU) economic sanctions.
On the other hand, India as the world’s second coal export destination after China also continues to increase coal purchases amid the country’s economic recovery. In 2021, Indonesia will export around 97 million tons of coal to India.
Last week, coal prices weakened following expectations of improved gas supply in Europe after the Nord Stream 1 pipeline resumed operations. As is known, the gas network belonging to the Russian company Gazprom has been repaired since July 11 and was completed last Thursday (21/7/2022).
Although already operating, the gas supply has not recovered 100%. “There is still 60% of capacity that has not returned and political conditions are still unstable. We can’t say if all these problems have been completely resolved,” said German Federal Network Agency (FNA) President Klaus Mueller, as quoted from Reuters.
CNBC INDONESIA RESEARCH TEAM
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