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Coal Prices Free Fall! Subsidence More than 14%

Coal Prices Free Fall! Subsidence More than 14%

Andrianus.my.id - Medan - The price of Newcastle's global reference thermal coal for December contract fell sharply by more than 14 percent this week. What's the trigger?

According to Refinitiv data, coal prices have been sloping since the beginning of this week, before finally managing to slightly strengthen on Friday (11/11).

On Friday (11/11), the price of coal on the ICE Newcastle market (Australia) ended at US$ 299.5/ton. shot up 3.49% compared to the previous day. However, this position is still the lowest level since April 11 2022 or the last seven months.

This week, coal prices recorded a sharp decline of 14.18%. On a monthly basis, coal prices also slumped 15.88%, although they still shot 97.36% on an annual basis ( year-on-year / yoy).

Coal prices, which were corrected earlier this week, were pressured by a number of negative catalysts, starting from the slowdown in the Chinese economy, weakening gas prices, to the projection of warmer winter weather in Europe.

The explosion of Covid-19 cases in China has forced Beijing to tighten mobility in a number of areas. This condition is expected to have a major impact on economic activity and coal demand.

Indonesia is the largest exporter of thermal coal used in power plants.

Reporting from  Reuters , China's coal imports only reached 29.18 million tons in October 2022. This number fell 11.7% compared to September 2022 which was recorded at 33.05 million tons. In fact, China's coal imports usually increase in October considering that this month is the period of replenishment of coal supplies.

In addition, European gas prices are observed to continue to slope. As is known, coal is an alternative raw material for energy when gas is expensive. So when the gas price slops, the demand for coal will decrease. 

On the other hand, gas supplies in Germany have also reached 99% of capacity, so the demand for the 'black sand' will certainly decrease. Coal storage at the main European port of ARA (Amsterdam, Rotterdam, Antwerp) is at its highest level in the last three weeks.

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