Global coal prices shoot up again on Ukraine and supply woes

The spectre of a gas supply crunch due to the Ukraine crisis, and disruptions due to omicron limiting production at mines have prompted global coal prices to soar once again towards record highs in less than a month’s time.

The benchmark Newcastle coal index has climbed by over a third this month to US $262 a tonne, Reuters reported on Friday.

Earlier this month, top coal supplier Indonesia ended a weeks-long export ban that eased global coal prices back from the highs hovering around US $300.

But now worries about a military standoff in Ukraine between the US and Russia has sparked fresh concerns about gas supplies being cut off from Russia.

Europe relies on Russia for nearly 35 percent of its natural gas and has been struggling with a gas shortage since last summer that sent local prices to record highs.

European utilities and vendors have ramped up their imports of coal as a buffer against any potential fuel shortages, further aggravating a market that was slowly recovering from Indonesia’s ban during the peak winter demand season.

In Australia, the thermal coal market is expected to see rising prices in the near term amid increasing omicron cases and persistent rains leading to supply tightness, as production in coal mines remains impacted.

Coupled with the supply side issues in Australia, the geopolitics of Ukraine has once again pushed coal prices northwards.

“Spot cargoes are becoming scarcer in the near term, with movement towards Europe where prices are jumping due to gas prices and the simultaneous effect of the recent Indonesian ban," Puneet Gupta, founder of Indian coal marketplace Coalshastra, told Reuters.