Gas Price Drops 7%, Coal Landslides!

Jakarta, CNBC Indonesia – Coal prices fell in yesterday’s trading. The price correction for the black stone occurred in line with the decline in natural gas prices.

Yesterday, the price of coal on the ICE Newcastle (Australia) market was recorded at US$ 235/ton. Ambledown of 2.63% compared to last weekend’s closing position.

The fall in coal prices followed natural gas prices. Yesterday, natural gas prices at Henry Hub (Oklahoma, United States) fell 7.78%.

Understandably, the prices of these two commodities have skyrocketed. Since the end of 2020 (year-to-date), coal and natural gas prices skyrocketed by 195.65% and 96.73%, respectively.

“With prices rising already very sharply, there is a risk that natural gas prices will experience a reversal. This will be bearish factor for coal,” said Toby Hassall, Refinitiv Analyst, in his research.

The prices of coal and natural gas are indeed interrelated. The jump in coal prices this year was caused by the surge in natural gas prices. When the price of natural gas is getting more expensive, the hunt for alternative energy sources becomes lively. One of them is coal.

For electricity generation, the cost of using coal is cheaper than natural gas. In Europe, the price of electricity generation with natural gas on October 12, 2021 is EUR 83.25/MWh, while that with coal is only EUR 54.76/MWh.

Moreover, the demand for electricity will be high because the northern hemisphere (northern hemisphere) and a number of Asian countries will enter winter. The need for heating increases which automatically increases the demand for electricity.

“The depleted coal stock will make imports increase, to anticipate the increasing demand in winter,” said Hassall.


(aji / aji)



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