May Day! May Day! Coal Prices Drop More 6%

May Day! May Day! Coal Prices Drop More 6%
May Day! May Day! Coal Prices Drop More 6%

Jakarta, CNBC Indonesia – Coal prices plummeted. On Thursday (22/09/2022), the price of October contract coal on the Newcastle ICE market closed at US$ 420.65 per ton. The price fell 6.1% compared to the previous day.

The price is the lowest so far this month. Yesterday’s weakening also broke the positive trend of coal prices which strengthened on Monday to Wednesday this week.

Within a week, the price of coal has fallen by 3.9% on a global basis point to point. In a month, the price of coal also fell 5.6%, while in a year it was still up 130.2%.

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The weakening of coal prices was caused by the decline in gas prices and the confusion of Russia’s coal embargo policy.

Natural gas price The EU Dutch TTF (EUR) yesterday fell 1.22% to 187.47 euros per megawatt-hour (MWh). Gas prices slid after supply concerns began to loosen. Data Gas Infrastructure Europe shows that gas storage in the European Union has reached 85% or close to their maximum target of 90%.

The drop in coal prices was also due to the uncertainty of the Russian coal embargo. European Union countries have not yet agreed on the continuation of the sanctions ban on Russian coal imports.

As is known, European Union members are proposing a number of proposals to lower gas prices. One of them is by imposing a tax on electricity producers whose production costs are low.

Coal was initially excluded. The European Union even plans to allow coal imports outside the region. However, recent reports say that the European Union continues to ban imports of Russian coal.

Mike Salthouse, director of The North of England P&I Association Ltd, said the confusion of information left traders confused about whether to import large quantities from other countries or wait for sanctions to be lifted.

The policy confusion has also confused ship owners and business players related to coal exports.

“Sanctions will be effective if consistent and clear so that everyone understands and complies. However, sanctions against coal are far from clear,” said Salthouse, as quoted from Bloomberg.

The clarity of this sanction occurred in the midst of Europe’s efforts to secure coal supplies ahead of winter.
Reporting from Montel News, the consultancy Wood Mackenzie estimates that European coal imports will reach 98 million tons this year. This number increased by 12 million tons compared to last year.

“Coal prices have skyrocketed but are still affordable compared to gas prices which continue to soar,” said analyst Adam Woods, analyst at Mackenzie.

CNBC INDONESIA RESEARCH TEAM

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