The price of coal has not yet dropped, even the price has shot up and has again penetrated the level of US$ 400/ton. In trading on Wednesday (18/5/2022), the price of coal on the ICE Newcastle (Australia) market for the June contract closed at US$ 407/ton. Up 1.8% compared to the previous day's close.
Yesterday's price increase also brought coal back through the level of US$ 400/ton for the first time since March 9, 2022, or more than two months ago. For the record, the Russo-Ukrainian war that started on February 24 made the price of coal soar from a price in the range of US$ 250/ton to around US$ 400/ton.
However, the price level in the range of US$ 400/ton only lasted for only a week, namely March 2-9, 2022, except on March 3, 2022. Coal prices then weakened again and moved below US$ 300/ton.
In the last three days, coal prices have shot up 12.5%. Overall, in a week, coal prices rose 10.7% point-to-point.
The rebound in coal prices was triggered by high demand so that supply is feared to be tight again. Demand from India, Japan and European Union countries is expected to continue to increase as they are moving fast to secure supplies.
Reporting from S&P Global, demand from India is expected to remain high this week. This demand will make coal prices soar, especially Indonesian coal because Indonesia is one of the main suppliers.
"The market is now watching whether buyers from India will continue to buy at higher prices than now. They are also waiting for Chinese buyers who have been absent in recent times as Chinese buyers can make prices change considerably," said S&P in S&P Global Commodity Insights' Markets. Asian Movers.
Meanwhile, Japanese companies and utilities are speeding up deliveries and contracts with Australia to secure supplies. Australia is the main choice because the coal produced from that country is of the high quality required. Coal from Vietnam and Indonesia is considered not to meet these requirements.
From Europe, it was reported that the European Union Commission agreed to eliminate dependence on energy supplies from Russia. The European Union will invest another 210 billion euros or US$ 221 billion over five years to reduce Russia's dependence on fossil energy and switch to green energy.
However, the European Union admits it is difficult for them to completely eliminate fossil energy sources for their generation in the short term. To cover the loss of energy supplies from Russia, including gas, they will increase their coal generating capacity. Eliminating energy dependence from Russia also means the EU will use coal plants for longer than originally planned.
To overcome the crisis in the short term, it means we have to look for 44-56 million tons of coal imported from other countries. In the long term, the use of coal is expected to be on the wane, in most countries it will probably disappear by the end of 2030," wrote the EU Commission in the Communication REPowerEU Plan COM(2022)230.
According to the European Union Commission, the embargo to Russia has boosted coal prices by 15% to EUR 325/ton. Natural gas is still the main source of electricity for household needs in the European Union with a total consumption of 42%, followed by oil (14%) and coal (3%).
Reporting from the Financial Times, by eliminating energy dependence from Russia by 2027, the European Union is expected to use 5% more coal power plants in the next 10 years. The high demand has prompted FocusEconomics to revise up its coal price projection for this year. The average price of coal will be in the range of US$ 225/ton, 5.2% higher than the initial projection.
To anticipate the increase in demand, a number of Indonesian coal producers are reportedly proposing to increase production. Executive Director of the Indonesian Coal Mining Association (APBI) Hendra Sinadia assessed that the increase in coal prices made a number of large companies plan to revise their RKAB. However, he does not have detailed data.
Currently, we do not have a plan to submit a revised work plan and budget or RKAB (Work Plan and Budget). We try to fulfill the existing commitments, including for domestic needs," Hendra told CNBC Indonesia, Wednesday (18/5/2022).
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