Coal prices shot up again and crossed the level of US$ 400 per ton. On Thursday (7/7/2022) trading, the selling price of August contract closed at US$ 412.6 per ton on the Newcastle ICE market, up 3.93% compared to the previous day, as quoted by CNBC Indonesia. Yesterday's price spike brought again coal prices back to the psychological level of US$ 400 for the first time since May 23, 2022. This price also brought black closer to its record high in history that occurred on March 2, 2022, which was US$ 446 per tonne.
According to CNBC Indonesia, overall, coal prices shot up 11.83% week on week. Within this month, the price of coal soared 11.82%, while within a year rose 216.78%. So far this year, the price of coal has crossed the psychological point of US$ 400 thrice, the first time in March, and then late May, and on 7 July.
In early March, CNBC Indonesia says, coal prices crossed USD 400 after the Russian-Ukrainian war broke out on February 24, 2022. The war sparked concerns about supply disruptions and logistical traffic. Moreover, Russia is the one of the largest suppliers of coal in the world.
At the end of May 2022, again coal prices shot up above USD 400 a ton due to electricity crisis in India and the European Union's decision to ban imports of Russian coal. The heat wave made the demand for electricity in India soar so that the demand for coal shot up.
CNBC Indonesia also noted that, coal prices have soared again in early July as Russia's decision to cut gas supplies to Europe. The decision made gas prices soar so that European countries restarted their coal power plants.
The surge in coal prices in yesterday's trading was also still triggered by the skyrocketing European natural gas prices and also the weather disturbances in Australia. The Australia is the largest exporter of metallurgical coal and the second largest exporter of thermal coal after Indonesia.
CNBC Indonesia also says, the European benchmark EU Dutch TTF (EUR) natural gas price touched EUR 183 per megawatt-hour yesterday, the highest record since March 2022. The price jumped 131% month on month and 450% year on year.
The spike in gas prices was due to concerns that maintenance work which is undergoing to the Nord Stream gas line could not be completed on schedule, which supposed to be completed by 11-21 July 2022. Russia will temporarily close the Nord Stream 1 pipeline for annual maintenance. The summer maintenance activity, which runs under the Baltic Sea from Russia to Germany, is scheduled to last from July 11 to 21 July. But many fear that the Russia is using planned maintenance activities to turn off the taps of the European Union's (EU) largest gas import infrastructure forever, as quoted by CNBC Indonesia.
If the maintenance work is not completed as per scheduled, then the gas prices are expected to increase to EUR 250. The Gas price spike will reflect into coal prices considering that the coal is an alternative energy source.
"If Nord Stream maintenance is not completed by 21 July, there will be a supply and demand gap of up to 67mcmc/day. I don't think this will be covered by coal alone," said Klaas Dozeman of Brainchild Commodity Intelligence, as quoted by Montel News.
Weather disturbances and flooding in Australia are also the drivers of coal price increases. Floods forced the Australian Rail Track Corporation to shut down the Hunter Valley rail network in New South Wales on Tuesday night.
The closure of the rail network has restricted coal shipping traffic to the Port of Newcastle. In fact, the port is the largest coal export hub in the world.
"The flood has affected the ARTC rail network so that coal deliveries cannot be carried out from Tuesday. However, we hope that this service can resume running as soon as possible," said a spokesman for Port Waratah Coal Services at the port of Newcastle as quoted by Montel News.
