Coal prices are on the rise again. With benchmark rates in Australia up over 30% since July — approaching the $100/t mark that prevailed in November 2016 after a massive run-up last year.
And a number of events the past week show that things could get even more heated in coal over the coming months.
The biggest story recently has been China. Where a push to restrict coal imports has driven local prices to multi-year highs. With data this week from Platts showing that 102 coal-laden boats are currently anchored offshore of Chinese ports, unable to deliver their loads.
That drop in imports has left local user hoarding supplies — with coal stockpiles held by China’s six largest power generators reportedly jumping nearly 16% in the past week, to 11.09 million tonnes.
But Chinese regulators said this week they’re keeping a close eye on coal users. Stipulating they will impose severe penalties on any groups found to be creating “abnormal fluctuations” in local coal prices.
That may mean coal users will have to buy on the open market through the winter, setting up for rising demand over the coming months.
And China isn’t the only place where demand is going up. With South Korea also seeing record coal imports of late — bringing in a all-time high 11.3 million tonnes in September, with October imports expected to set a fresh record at 12 million tonnes.
That’s reportedly coming as new coal-fired plants start up, and Korean nuclear plants experience downtime. Meaning Korean users are scrambling for supplies — even as mine output may be about to take a hit.
Because of key coal-producing nation South Africa. Where the National Union of Mineworkers said this week it may launch strikes at coal mines across the country, in support of demands for higher wages.
That threat of lost supply — and rising global demand — is all coming just as new and significant players are entering the coal space. Such as Bangladesh: where state minerals firm Petrobangla said this week it is looking at buying stakes in coal mines in South Africa, Australia and Indonesia.
Petrobangla’s stated goal is to acquire captive supply for export back to Bangladesh’s surging coal-fired power sector. Which would mean one more mouth to feed at a time when supply and prices are getting extremely tight.
Watch for ongoing import numbers in China and Korea, and for South African strike announcements and Bangladesh deals.
Here’s to things getting exciting again,
Dave Forest