Asia’s Seaborne Thermal Coal Prices Recently Drop

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Asia’s seaborne thermal coal prices have decreased recently as winter demand has passed and Europe’s energy crisis has eased. The decrease in demand for thermal coal results from several factors, including a decrease in energy consumption during the milder winter months and an increase in alternative energy sources such as natural gas and renewable energy.

Last week, the prices of the primary traded grades of coal used in power plants fell to their weakest levels in months, and in the case of one of the significant Australian types, to the poorest levels in an entire year.

According to the commodity price reporting company Argus, the energy value of Australian coal at Newcastle Port, which is 5,500 kcal/kg, dropped to $129.87 a tonne in the week ending January 27, the lowest price since the week ending January 21, 2022.

“This grade of coal is most commonly bought by Indian utilities and was the preferred Australian thermal grade among Chinese buyers prior to Beijing’s unofficial ban on Australian cargoes, imposed amid a diplomatic dispute in mid-2020,” said Reuters.

Despite the lifting of the Chinese ban, it is unlikely that customers will start repurchasing Australian thermal coal, given the availability of comparable coal from Russia.

Another high quality purchased by South Korea and Japan, 6,000 kcal/kg Newcastle grade, also went down last week. Aside from Australian coal, the largest thermal coal exporter is also dropping, Indonesia.

The third on the list, Russian thermal coals from Vostochny port dropped their price to $157 a tonne in mid-January after hitting their lowest in December 2022.

Despite the decrease in prices, the thermal coal industry is expected to remain a significant energy source for many countries in the region, particularly for those lacking the infrastructure and resources to transition to cleaner energy sources.

Overall, the decrease in Asia’s seaborne thermal coal prices is a positive sign for the transition towards a more sustainable energy future. As countries in the region continue to reduce their reliance on fossil fuels, it is expected that prices will continue to decline and the demand for cleaner sources of energy will increase.

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