Coal news and updates

Thermal Coal Prices Expected to Remain Weak in 2024

Thermal coal prices are expected to continue their decline for the remainder of 2023 and into 2024 due to oversupply in the Chinese market. The surge in domestic production and increased imports have led to an abundance of coal, resulting in lower prices. Australian coal prices experienced an 8% decrease in the third quarter of 2023 and a 31% drop in the second half of the year. South African coal prices followed a similar trend.

The conflict in the Middle East has provided a slight increase in coal prices, but it has not been enough to offset the oversupply. The World Bank Commodity Outlook reports that global supply recovery will cause the Newcastle benchmark price, currently at $122 per tonne, to decline from almost $180 per tonne over 2023.

Factors contributing to the drop in prices include fuel substitution, declining natural gas prices, high EU Emissions Trading System allowance prices, and high levels of storage, particularly in Europe. Additionally, increased supply from major producers and higher levels of exports from Indonesia have further reduced market prices.

Despite the drop in prices, the situation is a far cry from the coal scarcity experienced in previous years, which resulted in power shortages. The availability of ample coal supplies has shifted the market dynamics.

In the long term, prices are expected to continue to decrease as the global economy progresses towards renewable energy sources. However, in the short term, there are potential upside risks to coal prices. An escalation of the Israel-Hamas conflict could lead to a spike in coal prices if natural gas prices are affected. Weather disruptions, such as heat waves and droughts induced by El Niño, can also increase power demand while reducing the contribution of hydropower.