Global coal supply has encountered difficulties due to increasing demand in Asia, which may lead to a rise in thermal coal prices in the upcoming winter. Analysts estimate that Australian coal prices, as a benchmark, have increased by 40% this year, reaching around $150 per ton, marking the highest level in two years.
Impact of Natural Gas Prices on the Coal Market
Analysts predict that prices will remain under pressure in the winter season due to high natural gas costs, which are pushing power producers towards using coal. Currently, natural gas prices in Asia have surpassed $30 per million British thermal units, and in Europe, they have exceeded €90 per megawatt hour.
Analysts estimate that Newcastle coal prices may reach over $350 per ton, indicating significant room for coal price increases. South Korea is recognized as a leader in demand growth in this area, and emerging Asian countries, including Vietnam and Pakistan, have also increased the attractiveness of coal due to rising energy costs.
Supply Pressures in China and India
In China and India, the world's largest coal consumers, supply pressures are also increasing. China's stringent regulations on mine safety and overproduction have limited domestic production growth. In India, weak production and stable electricity generation have reduced inventories, with power plant coal stocks declining by more than 60% from their peak in March.
Analysts expect that stockpiling in both countries will contribute to import demand in the coming months. Meanwhile, Indonesia's coal exports have decreased due to reduced government production and drought-related disruptions in coal transportation. Russia's exports have also been limited due to financial and logistical challenges, with attacks on ships effectively halting exports from the Azov and Black Sea ports.
Increased shipments from Australia, the United States, South Africa, and Colombia have partially compensated for these shortages, but analysts warn that limited export capacity makes global coal markets vulnerable to further supply disruptions.
