20-05-2022 Coal prices surge sky high and spell troubles for India, Maersk Brokers
The price of coal trading out of the port of Newcastle reached record highs this week, currently fetching USD 393/tonne, up 37% from a month ago and more than double the USD/tonne at the start of the year.
India is currently experiencing the highest average temperatures ever recorded and electricity demand from air conditioning is coinciding with growing office demand as Indians are returning to offices and factories thanks to the end of Covid curbs. The surge is causing blackouts across the country at a time when Monsoon is approaching, and logistics and a lack of coal train transport has hindered the coal in reaching the coal fired power plants.
India’s price cap on electricity has discouraged coal imports at current prices, but as officials struggle to address rising power demand, stricter measures are now being implemented. Earlier this week, India’s power ministry said it would cut domestic supply to state run utilities by 5% if they do not start importing more coal for blending by June 15.
Additionally, Europe’s ban on Russian coal following the invasion of Ukraine has led European buyers to pursue Asian cargoes to fill the gap, supporting the rise in prices and further limiting supply for Indian buyers.