NEWS
Coal  

Coal's collapse crowns winners and losers from China to the US

It’s been a stormy month for benchmark coal prices in Asia, with the potential for reverberations across the globe.

A double whammy of Chinese import curbs and collapsing gas prices in Europe have whacked Australian thermal coal, at a time when demand weakens after the winter heating season and Asian buyers typically shut power plants for maintenance.

While the International Monetary Fund this week cut its outlook for global growth on concerns over the effects of a long-running trade war between the U.S. and China, analysts say coal’s current collapse owes less to weaker economic activity than a slew of disparate market forces.

The European effect

Coal prices at Newcastle in Australia — the world’s second-biggest exporter of the power-station fuel — slumped 20 percent from early March to the lowest level since 2017 on April 3. The fall can trace some of its origins to Europe.

European gas tumbled last month on an oversupply, subsequently dragging Atlantic Basin coal lower, which in turn weighed on Newcastle prices, according to Citigroup Inc. However, prices could start to recover as warmer temperatures boost air-conditioning use, according to Credit Suisse Group AG.

Opportunity for some

Newcastle’s slump is already crowning winners and losers. Global miner Glencore Plc last month locked in some annual volumes to Japanese utilities at about $95 a ton, prior to the steep price drop. U.S. exporters may lose out as they become priced out of the Asian market, according to Citigroup. The bank also predicts China may lift import curbs to access cheaper Australian coal if prices hold around current levels.

Speculation lingers

Lack of clarity over China’s import curbs has caused uncertainty in the market. Ongoing delays to Australian imports by the world’s biggest consumer has discouraged traders from ordering cargoes, according to Wood Mackenzie Ltd.

As speculation lingers about the Asian nation’s go-slow tactics and producers redirect shipments, Australian miner Whitehaven Coal Ltd. said Thursday that China’s policies are to support its miners, which came under pressure from lower domestic prices in 2018. Shares of producer China Shenhua Energy Co. have risen almost 5 percent this year, while Yanzhou Coal Mining Co. has soared nearly 40 percent.

Australia “naturally ends up the victim of what is essentially an attempt by the Chinese government to cap overall coal imports” to protect the domestic coal market, said Ralph Leszczynski, head of research at shipbroker Banchero Costa & Co. in Singapore.

LNG link

Royal Dutch Shell Plc last week agreed to sell liquefied natural gas to Tokyo Gas Co. at prices that include a link to coal, the world’s first such contract. By diversifying its price exposure for LNG, which has historically been linked to oil, the Japanese utility said it stabilized costs of the supercooled fuel.

If the trend catches on, coal may face even more pressure in some markets as gas generators are better able to compete with power suppliers using the world’s dirtiest fossil fuel.

“In Asia, gas is competing closely with coal in power generation,” said Xi Nan, a senior gas and power analyst with Rystad Energy AS. “However, we have started seeing dropping coal-to-gas switching prices since Q3 2018, suggesting that the two fuels are moving towards the same direction and not always in line with oil prices.”

Far from the end

The current collapse isn’t indicative of a global shift away from the dirty fuel. While cleaner energy sources such as wind and solar are making inroads into the power mix throughout Asia, they haven’t come close to ringing the death knell for coal, yet.

The fossil fuel will continue to be a key provider of heat and light through to 2040, according to the International Energy Agency, while BHP Group sees India and other low income emerging markets driving demand into the future.

News No: 4338
Date: 2019/04/12 - 15:38
News Source: MINING.COM

Coal  China  US  Asia  LNG 

Comments:

Leave a Comment:

   
   
   
 

148 new items added to imports blacklist

Iranian Industry, Mining and Trade Minister Reza Rahmani said that the imports of 148 new commodities has been banned by the ministry to rise the number of such items to 1487, IRIB reported on Tuesday.
 

Over $9b needed for completing semi-finished projects: industry min.

Iranian Industry, Mining and Trade Minister Reza Rahmani said 390 trillion rials (nearly $9.3 billion) is required to finish unfinished projects with over 60 percent physical progress, Shata reported.
 

Speaker: US Defeated in Oil Sanctions by Iran's Smart Moves

Iranian Parliament Speaker Ali Larijani underlined the US failure to zero his country's oil exports, saying that Washington has been defeated by Iran's smart moves.
 

Oil Minister: Sanctions Unable to Halt Iranian Crude Exports

Iranian Oil Minister Bijan Namdar Zanganeh underlined that the US sanctions have failed to stop Iran's oil supplies to other countries.
 

Iran to Earn $5bln by March from Energy Exports to Iraq

Tehran will raise $5 billion revenues for its gas and electricity exports to neighboring Iraq by the end of the current local calendar year on March 20, 2020, said Secretary General of Iran-Iraq Joint Chamber of Commerce Seyed Hamid Hosseini on Tuesday.
 

Two new coal mine proposals under review in British Columbia

Continued strong global demand for steelmaking coal, especially in China and India, may be behind two new coal mine proposals in Canada’s British Columbia province.
Upcoming Events
Publications
 Mines & Metals

Mine & Business Today

 Scrap & Recycling

Ahangan

Our partners