Asia’s coal prices hit new highs as demand from power global shoot up

Thermal coal prices across Asia hit new highs this week as China and India restock critically low inventories to meet robust power consumption, industry sources said. In India, prices of better burning U.S. thermal coal in North Indian retail markets have risen by a third and are up by more than 100% from a year ago to Rs 14,600 a tonne.

Coal supply is struggling to catch up with demand in top consumer China as mine safety checks slow output. In the world’s second largest consumer India, the monsoon season and covid-19 restrictions have hampered production.

The tight coal market across Asia is accentuating a global bull market in all power generation fuels, including natural gas and high-sulphur fuel oil, buoyed by economic growth and LNG supply issues.

“It is the perfect storm, prices are galloping due to China’s heatwave, shortages with Coal India and power plants, high freight rates, increased appetite in the rest of Asia, tightness due to Indonesian rains, Hurricane Ida in the U.S., and in general a supply crunch,” Puneet Gupta, founder of Indian coal marketplace Coalshastra, told Reuters.

Coal prices from exporters Australia and Indonesia have also scaled all-time highs recently, with Australia’s Newcastle prices rising roughly 50% and Indonesian export prices up 30% in the last three months.

Chinese futures for coking coal, a raw material mainly used in steelmaking, are also surging, and have gained over 50% in the past three months. Strict supply controls in China have been a catalyst behind the latest price surge.

Shanxi, China’s top coal mining province, on Friday ordered all its coal mines to carry out a two-month safety inspection, and said those which failed to comply would be shut down for rectification.

Another Chinese state-owned coal mine with an annual output capacity of 6 million tonnes has already been closed for at least a month by the Shanxi government after a fatal accident occurred last week. In India, the government has urged local coal mines to boost output and told utilities to import coal with several power plants on the verge of running out of fuel. Coal powers nearly three-fourths of India’s electricity demand.

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