Price surge likely to be a blip in coal’s slow decline
London/Singapore — The march of coal prices to eight-month highs, driven by China’s appetite for power consumption, looks like an interlude in a longer-term decline. Investors widely expect a slow demise for coal use because of policies that encourage cleaner natural gas and renewable energy, but there has been a sharp reversal of fortunes in the shorter-term outlook for the sector. Asia’s benchmark physical coal prices have gained more than a third from lows in May to nearly $98 per tonne, while European benchmark API2 2018 coal futures are at eight-month highs near $74 a tonne. Recent gains are largely due to high demand in China, where power consumption has jumped more than 6% since the beginning of 2017. In July, torrential rains forced China to cut capacity by as much as two-thirds at its Three Gorges and Gezhouba hydropower plants to ease pressure on the Yangtze River, forcing utilities to switch to coal. Three Gorges has an installed generation capacity of 22.5GW — equivalent...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.