Thermal coal in Asia advanced to a record as a threat of supply disruptions adds new risks to a global energy sector already engulfed in crisis.
Spot physical coal loaded at Australia’s Newcastle port was priced at $436.71 a ton on Friday, an all-time high, according to a biweekly index compiled by OPIS seen by Bloomberg News. That’s nearly triple the price this time last year.
Newcastle futures for October jumped 5% to $463.75 a ton Monday, according to ICE Futures Europe, to the highest price in data stretching back to January 2016. Europe’s benchmark coal price is also trading at a record.
Uncertainty over gas flows to Europe and forecast stronger coal demand from the continent is continuing to propel prices of the fuel. There’s also a prospect of weather disruptions at mines in Australia, a key global supplier, with a third straight La Nina forecast for late 2022 likely to deliver heavier rainfall.
“Any severe disruptions to Australian coal shipments could push the high-calorific value price even to fresh highs,” Morgan Stanley analysts including Marius van Straaten said in a note.
Some previous La Nina periods have seen coal mines and railroads in Australia’s New South Wales and Queensland states disrupted by heavy rainfall, and output fell by an estimated 20% to 30% in a particularly severe weather event that spanned several months in 2010 and 2011.
Coal has seen a demand resurgence as a result of a squeeze on global gas supply as some buyers shun fuel imports from Russia, and with slow investments in other sources including renewables in many nations. Several European countries have resumed coal plants, while other key consumers including India have boosted imports.