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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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Wednesday, 22 September 21
MARKET INSIGHT - INTERMODAL
The unfolding last week of a trilateral defence pact between the United States, Australia, the United Kingdom (AUKUS) envisages a wide range of col ...
Tuesday, 21 September 21
CHINESE COAL IMPORTS FROM AUSTRALIA DROP 98.6% AS RESTRICTIONS BITE - BIMCO
In the first seven months of the year Chinese coal imports from Australia have totalled just 780,000 tonnes as Chinese restrictions on Australian c ...
Tuesday, 21 September 21
CHINA'S COAL OUTPUT RESUMES GROWTH IN AUGUST - XINHUA
China’s raw coal output rose 0.8 percent year on year to 340 million tonnes last month, official data showed.
The growth rate ...
Wednesday, 15 September 21
MARKET INSIGHT - INTERMODAL
Following the oil price sell off during most of August, partly triggered by oil demand fears amid the delta COVID variant, oil prices have resumed ...
Saturday, 11 September 21
CIL STEPS UP SUPPLY COAL TO POWER SECTOR; PER-DAY AVERAGE 20 PC HIGHER THAN LAST YEAR - PTI
State-owned CIL on Friday said it has stepped up the supply of coal to the power sector in the first eight days of the current month, with an avera ...
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- Binh Thuan Hamico - Vietnam
- Samtan Co., Ltd - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Africa Commodities Group - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Central Electricity Authority - India
- Miang Besar Coal Terminal - Indonesia
- Orica Australia Pty. Ltd.
- OPG Power Generation Pvt Ltd - India
- Carbofer General Trading SA - India
- Oldendorff Carriers - Singapore
- Salva Resources Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Simpson Spence & Young - Indonesia
- Timah Investasi Mineral - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- Intertek Mineral Services - Indonesia
- Bhatia International Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Standard Chartered Bank - UAE
- Meenaskhi Energy Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Anglo American - United Kingdom
- Mintek Dendrill Indonesia
- GVK Power & Infra Limited - India
- Posco Energy - South Korea
- PetroVietnam Power Coal Import and Supply Company
- Pendopo Energi Batubara - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Parry Sugars Refinery, India
- Kepco SPC Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Grasim Industreis Ltd - India
- Eastern Coal Council - USA
- Semirara Mining Corp, Philippines
- Electricity Authority, New Zealand
- Aditya Birla Group - India
- Indika Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Ministry of Mines - Canada
- Directorate General of MIneral and Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Makarim & Taira - Indonesia
- Indonesian Coal Mining Association
- McConnell Dowell - Australia
- Siam City Cement PLC, Thailand
- Coastal Gujarat Power Limited - India
- Riau Bara Harum - Indonesia
- Latin American Coal - Colombia
- GMR Energy Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Borneo Indobara - Indonesia
- Price Waterhouse Coopers - Russia
- Romanian Commodities Exchange
- Semirara Mining and Power Corporation, Philippines
- Malabar Cements Ltd - India
- Wood Mackenzie - Singapore
- Videocon Industries ltd - India
- Bukit Makmur.PT - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Indian Energy Exchange, India
- Savvy Resources Ltd - HongKong
- Meralco Power Generation, Philippines
- SMC Global Power, Philippines
- Global Green Power PLC Corporation, Philippines
- Mjunction Services Limited - India
- Ambuja Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Deloitte Consulting - India
- Kapuas Tunggal Persada - Indonesia
- Madhucon Powers Ltd - India
- IHS Mccloskey Coal Group - USA
- Electricity Generating Authority of Thailand
- Power Finance Corporation Ltd., India
- Central Java Power - Indonesia
- Sical Logistics Limited - India
- Australian Commodity Traders Exchange
- Directorate Of Revenue Intelligence - India
- Metalloyd Limited - United Kingdom
- Vizag Seaport Private Limited - India
- Goldman Sachs - Singapore
- Altura Mining Limited, Indonesia
- Wilmar Investment Holdings
- Bank of Tokyo Mitsubishi UFJ Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SMG Consultants - Indonesia
- International Coal Ventures Pvt Ltd - India
- Coal and Oil Company - UAE
- Orica Mining Services - Indonesia
- PowerSource Philippines DevCo
- Sinarmas Energy and Mining - Indonesia
- Manunggal Multi Energi - Indonesia
- Cement Manufacturers Association - India
- ICICI Bank Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Dalmia Cement Bharat India
- Sindya Power Generating Company Private Ltd
- Trasteel International SA, Italy
- Heidelberg Cement - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- Sakthi Sugars Limited - India
- SN Aboitiz Power Inc, Philippines
- Formosa Plastics Group - Taiwan
- European Bulk Services B.V. - Netherlands
- Agrawal Coal Company - India
- Georgia Ports Authority, United States
- Ministry of Finance - Indonesia
- The University of Queensland
- LBH Netherlands Bv - Netherlands
- Ind-Barath Power Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- Uttam Galva Steels Limited - India
- India Bulls Power Limited - India
- Chamber of Mines of South Africa
- Energy Development Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vedanta Resources Plc - India
- Bulk Trading Sa - Switzerland
- Gujarat Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- The State Trading Corporation of India Ltd
- Economic Council, Georgia
- Asmin Koalindo Tuhup - Indonesia
- New Zealand Coal & Carbon
- Kohat Cement Company Ltd. - Pakistan
- Bukit Baiduri Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bangladesh Power Developement Board
- Chettinad Cement Corporation Ltd - India
- Barasentosa Lestari - Indonesia
- Gujarat Sidhee Cement - India
- Tata Chemicals Ltd - India
- VISA Power Limited - India
- Mercuria Energy - Indonesia
- Planning Commission, India
- CNBM International Corporation - China
- Star Paper Mills Limited - India
- Globalindo Alam Lestari - Indonesia
- Interocean Group of Companies - India
- Sojitz Corporation - Japan
- Medco Energi Mining Internasional
- South Luzon Thermal Energy Corporation
- Karbindo Abesyapradhi - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Coal Blending Company Limited - Australia
- CIMB Investment Bank - Malaysia
- Bhushan Steel Limited - India
- GAC Shipping (India) Pvt Ltd
- MS Steel International - UAE
- Independent Power Producers Association of India
- Kalimantan Lumbung Energi - Indonesia
- Indogreen Group - Indonesia
- Mercator Lines Limited - India
- Lanco Infratech Ltd - India
- Kideco Jaya Agung - Indonesia
- Larsen & Toubro Limited - India
- Rio Tinto Coal - Australia
- ASAPP Information Group - India
- Toyota Tsusho Corporation, Japan
- Petron Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Port Waratah Coal Services - Australia
- Marubeni Corporation - India
- Minerals Council of Australia
- Xindia Steels Limited - India
- Renaissance Capital - South Africa
- Singapore Mercantile Exchange
- Indian Oil Corporation Limited
- Attock Cement Pakistan Limited
- Coalindo Energy - Indonesia
- Edison Trading Spa - Italy
- Energy Link Ltd, New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Thai Mozambique Logistica
- Ministry of Transport, Egypt
- White Energy Company Limited
- Tamil Nadu electricity Board
- Kobexindo Tractors - Indoneisa
- The Treasury - Australian Government
- London Commodity Brokers - England
- Commonwealth Bank - Australia
- Antam Resourcindo - Indonesia
- Eastern Energy - Thailand
- Straits Asia Resources Limited - Singapore
- Jaiprakash Power Ventures ltd
- Kaltim Prima Coal - Indonesia
- Jindal Steel & Power Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Sree Jayajothi Cements Limited - India
- Global Business Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Alfred C Toepfer International GmbH - Germany
- Neyveli Lignite Corporation Ltd, - India
- Sarangani Energy Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Karaikal Port Pvt Ltd - India
- PTC India Limited - India
- Baramulti Group, Indonesia
- Australian Coal Association
- Maheswari Brothers Coal Limited - India
- Iligan Light & Power Inc, Philippines
- Thiess Contractors Indonesia
- Parliament of New Zealand
- TeaM Sual Corporation - Philippines
- Bharathi Cement Corporation - India
- Merrill Lynch Commodities Europe
- Essar Steel Hazira Ltd - India
- Billiton Holdings Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
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