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Thursday, 14 October 21
SPIKING COAL PRICES: DON’T BLAME THE ENERGY TRANSITION - IEEFA
 Volatility highlights urgency for renewables-based energy solutions
“Energy crisis.” The phrase evokes nearly-forgotten images of gasoline queues in the 1970s, but increasingly describes the spike in global fossil fuel prices. A handful of commenters eagerly lay the blame on renewable energy, which they claim has distracted the world’s attention from investments in oil, gas, and coal production that could have calmed markets.
But a sober analysis suggests that today’s energy price crunch has nothing to do with renewables. After all, price spikes aren’t unique to energy. Computer chips, lumber, copper, and iron ore are among the many commodities and products that have seen global price spikes and shortages this year. As the COVID-19 pandemic raged and then eased—alternately slamming the brakes and flooring the accelerator of the global economy—volatility became the rule rather than the exception.
A close look at the surge in global coal prices is instructive. Prices for some low-grade thermal coals have quadrupled on international markets since last year’s lows. COVID-induced volatility bears much of the blame. But price spike also has its roots in the world’s largest coal market, China, which produces (and consumes) half the world’s coal and meets 60 percent of its energy needs from the mineral.
Over the past year, China has experienced domestic coal shortfalls and shrinking stockpiles that forced the country to boost its imports. Given the country’s outsized appetite for coal, even a modest boost in imports quickly sent seaborne coal prices skyrocketing. The recipe for China’s coal shortages had at least five key ingredients, none related to the country’s renewables policies:
A mine safety crackdown. The Chinese coal mining sector has been a risky business. The state-run Xinhua News Agency reported that 225 coal miners died in China during 2020 in 122 accidents. But in the wake of a cluster of fatalities, federal authorities launched a major safety inspection effort in November 2020. The heightened scrutiny was blamed for a slowdown in production that began in April, a month after China boosted penalties for mine accidents. The prospect of jail time made mining executives reluctant to boost output even as supplies tightened.
Curbs on overproduction. China’s coal mining sector had struggled over much of the past decade with overcapacity that flooded markets with cheap coal—making it hard for many firms to find profits. Last November, just as China’s government was cracking down on coal mine safety, it also stepped up inspections for quota violations—once again making it risky for mining companies to boost supplies.
An anti-corruption campaign in Inner Mongolia. One of China’s most sparsely populated provinces, Inner Mongolia produces roughly one-quarter of the nation’s coal. President Xi Jinping announced in March that the government would investigate coal industry corruption in the region in a campaign that would “never end.” (The campaign focused, in part, on companies producing more coal than their quotas.) Top officials in the regional government have been sent to jail for more than a decade, with one given a suspended death sentence. In early 2021, the government was investigating almost 700 corruption cases involving about 1,000 people. The campaign, which was expanded across the country, also encouraged coal mining firms to curb their production to avoid becoming entangled in an investigation.
A halt to Australian coal imports. Tensions between Australia and its largest trading partner heated up last year, largely due to China’s territorial claims in the Pacific Ocean and the Australian government’s call for a “weapons inspector”-type investigation of the origins of the COVID-19 virus. China responded by blocking Australian coal imports in November 2020. The squabble led Beijing to seek out other markets for coal imports from Indonesia, Russia, the United States and South Africa. The shift contributed to a tripling in the price of lower-grade Indonesia coal over the summer.
Weather: Too cold, too hot, and too wet. An unusually cold 2020-21 winter in North Asia prompted blackouts in some regions. At least nine grid systems in northern provinces recorded record demand in early January. Summer heat waves continued to pressure the coal supply. Now winter approaches, and major power plants reported having about a 10-day stockpile of coal, roughly half of last year’s total. The country, desperate to boost coal consumption, faces a new weather-related obstacle: Record-breaking floods have shut down 60 mines in Shanxi province, a region that produces 30 percent of China’s coal.
These factors, together with COVID, helped precipitate a domestic coal crunch in China that quickly spread around the planet. Those who would blame the growth of renewables for China’s coal shortages are grasping at straws. If anything, ramping up investments in renewables would ease the country’s reliance on volatile, unpredictable fossil fuel supplies.
As for China, so for the world. Until the planet completes its transition to a renewable energy-based economy, supply and demand shocks—such as the ones currently traveling around the globe—will be a fact of life.
By Clark Williams-Derry
Energy Policy Analyst
IEEFA
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Monday, 25 October 21
A QUESTION OF POSSESSION - THE BALTIC EXCHANGE
Possession and tangibility are closely related concepts long established under English law. Yet a change to these concepts is around the corner. Th ...
Monday, 25 October 21
CHINA VOWS TO SEVERELY PUNISH MARKET VIOLATIONS AMID LOW COAL FUTURES PRICES - GLOBAL TIMES
Domestic coal futures had plunged for three consecutive trading days after the government vowed to crack down on soaring prices, and China’s ...
Monday, 25 October 21
FARMERS MAY JOIN THE COAL COMMODITY MARKET TO REDUCE RISKS - GLOBAL TIMES
A recent trip to by the Global Times to East China’s Shandong Province to get a glimpse of China’s coal supply chain revealed a surpris ...
Monday, 25 October 21
CHINA COAL PRICES MARK WORST WEEK SINCE MAY ON GOVERNMENT INTERVENTION - REUTERS
China’s thermal coal futures plunged on Friday and turned in their worst week in five months, following Beijing’s strongest interventio ...
Friday, 22 October 21
THE BIG PICTURE: ENERGY MARKETS - BREAK WAVE ADVISORS
The shipping markets have been pulled further into wild markets of coal and other energy sources. Given how nebulous this sector is, it’s alw ...
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- GN Power Mariveles Coal Plant, Philippines
- Standard Chartered Bank - UAE
- Anglo American - United Kingdom
- Salva Resources Pvt Ltd - India
- Madhucon Powers Ltd - India
- PNOC Exploration Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- Vedanta Resources Plc - India
- Manunggal Multi Energi - Indonesia
- Africa Commodities Group - South Africa
- India Bulls Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Uttam Galva Steels Limited - India
- Oldendorff Carriers - Singapore
- ASAPP Information Group - India
- Marubeni Corporation - India
- Indonesian Coal Mining Association
- San Jose City I Power Corp, Philippines
- Samtan Co., Ltd - South Korea
- Wood Mackenzie - Singapore
- Bhatia International Limited - India
- Edison Trading Spa - Italy
- Australian Commodity Traders Exchange
- Makarim & Taira - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Ceylon Electricity Board - Sri Lanka
- Lanco Infratech Ltd - India
- Mintek Dendrill Indonesia
- Iligan Light & Power Inc, Philippines
- Antam Resourcindo - Indonesia
- ICICI Bank Limited - India
- Krishnapatnam Port Company Ltd. - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Deloitte Consulting - India
- Indogreen Group - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Ind-Barath Power Infra Limited - India
- Grasim Industreis Ltd - India
- Petron Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Rio Tinto Coal - Australia
- The University of Queensland
- Indo Tambangraya Megah - Indonesia
- Savvy Resources Ltd - HongKong
- Singapore Mercantile Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercator Lines Limited - India
- Independent Power Producers Association of India
- Aboitiz Power Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Mjunction Services Limited - India
- Bharathi Cement Corporation - India
- Directorate General of MIneral and Coal - Indonesia
- Electricity Generating Authority of Thailand
- Kapuas Tunggal Persada - Indonesia
- New Zealand Coal & Carbon
- Planning Commission, India
- PTC India Limited - India
- Bukit Baiduri Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- SN Aboitiz Power Inc, Philippines
- Merrill Lynch Commodities Europe
- PowerSource Philippines DevCo
- Metalloyd Limited - United Kingdom
- Star Paper Mills Limited - India
- Sakthi Sugars Limited - India
- Directorate Of Revenue Intelligence - India
- Jaiprakash Power Ventures ltd
- Sical Logistics Limited - India
- Renaissance Capital - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Oil Corporation Limited
- Binh Thuan Hamico - Vietnam
- Eastern Coal Council - USA
- Minerals Council of Australia
- Indika Energy - Indonesia
- White Energy Company Limited
- Semirara Mining Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Carbofer General Trading SA - India
- Simpson Spence & Young - Indonesia
- Kartika Selabumi Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Electricity Authority, New Zealand
- Siam City Cement - Thailand
- Eastern Energy - Thailand
- Kaltim Prima Coal - Indonesia
- Orica Mining Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Thiess Contractors Indonesia
- Tamil Nadu electricity Board
- Maharashtra Electricity Regulatory Commission - India
- Dalmia Cement Bharat India
- Parliament of New Zealand
- Ministry of Finance - Indonesia
- London Commodity Brokers - England
- AsiaOL BioFuels Corp., Philippines
- Cement Manufacturers Association - India
- Sindya Power Generating Company Private Ltd
- Indian Energy Exchange, India
- Medco Energi Mining Internasional
- Vizag Seaport Private Limited - India
- Baramulti Group, Indonesia
- GVK Power & Infra Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Interocean Group of Companies - India
- Straits Asia Resources Limited - Singapore
- Port Waratah Coal Services - Australia
- Kideco Jaya Agung - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- International Coal Ventures Pvt Ltd - India
- Bhushan Steel Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Globalindo Alam Lestari - Indonesia
- Altura Mining Limited, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Power Finance Corporation Ltd., India
- Therma Luzon, Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Price Waterhouse Coopers - Russia
- Sojitz Corporation - Japan
- Thai Mozambique Logistica
- Pipit Mutiara Jaya. PT, Indonesia
- Banpu Public Company Limited - Thailand
- Latin American Coal - Colombia
- Intertek Mineral Services - Indonesia
- Chamber of Mines of South Africa
- Alfred C Toepfer International GmbH - Germany
- Mercuria Energy - Indonesia
- Trasteel International SA, Italy
- Toyota Tsusho Corporation, Japan
- Meralco Power Generation, Philippines
- Coal and Oil Company - UAE
- Neyveli Lignite Corporation Ltd, - India
- Posco Energy - South Korea
- European Bulk Services B.V. - Netherlands
- Wilmar Investment Holdings
- Central Electricity Authority - India
- Commonwealth Bank - Australia
- Romanian Commodities Exchange
- CIMB Investment Bank - Malaysia
- Siam City Cement PLC, Thailand
- Orica Australia Pty. Ltd.
- VISA Power Limited - India
- The Treasury - Australian Government
- Energy Development Corp, Philippines
- Larsen & Toubro Limited - India
- Kepco SPC Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Australian Coal Association
- CNBM International Corporation - China
- Asmin Koalindo Tuhup - Indonesia
- SMC Global Power, Philippines
- Bukit Makmur.PT - Indonesia
- Chettinad Cement Corporation Ltd - India
- Ministry of Mines - Canada
- Ministry of Transport, Egypt
- Coalindo Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Bhoruka Overseas - Indonesia
- Energy Link Ltd, New Zealand
- GAC Shipping (India) Pvt Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Timah Investasi Mineral - Indoneisa
- McConnell Dowell - Australia
- OPG Power Generation Pvt Ltd - India
- Agrawal Coal Company - India
- Aditya Birla Group - India
- Global Business Power Corporation, Philippines
- Bangladesh Power Developement Board
- Pendopo Energi Batubara - Indonesia
- Kumho Petrochemical, South Korea
- PetroVietnam Power Coal Import and Supply Company
- Parry Sugars Refinery, India
- Kobexindo Tractors - Indoneisa
- Sree Jayajothi Cements Limited - India
- Jindal Steel & Power Ltd - India
- The State Trading Corporation of India Ltd
- Bulk Trading Sa - Switzerland
- Global Coal Blending Company Limited - Australia
- Riau Bara Harum - Indonesia
- Goldman Sachs - Singapore
- Heidelberg Cement - Germany
- Attock Cement Pakistan Limited
- Maheswari Brothers Coal Limited - India
- GMR Energy Limited - India
- Ambuja Cements Ltd - India
- Formosa Plastics Group - Taiwan
- Essar Steel Hazira Ltd - India
- South Luzon Thermal Energy Corporation
- Billiton Holdings Pty Ltd - Australia
- Kohat Cement Company Ltd. - Pakistan
- Sarangani Energy Corporation, Philippines
- Economic Council, Georgia
- Tata Chemicals Ltd - India
- Xindia Steels Limited - India
- Central Java Power - Indonesia
- Barasentosa Lestari - Indonesia
- Georgia Ports Authority, United States
- SMG Consultants - Indonesia
- Videocon Industries ltd - India
- Karaikal Port Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- Cigading International Bulk Terminal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Malabar Cements Ltd - India
- MS Steel International - UAE
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