A deepening global fuel shortage has pushed up benchmark coal prices in Asia to record levels.
Spot coal prices at Australia’s Newcastle port rose 3.4% on Friday to a record $402.50 a tonne, according to an index compiled by IHS Markit . This is the first time the closely watched coal spot price index has breached $400.
Power plants across Asia and Europe are rushing to get more coal to replace dwindling natural gas supplies, while miners struggle to boost output. Germany and Austria are reviving idled coal-fired power plants in response to Russian gas supply constraints, while Japan and South Korea are stockpiling the fuel ahead of summer heat.
As the energy crisis intensifies and many European countries “bow their heads” to old energy sources , German Economy Minister Habeck has said that Germany is working on a new law to reopen idle coal-fired power plants of up to 10 billion watts for a period of two years. At the same time, Germany also threw a large coal order of 150 million tons to Indonesia.
The Netherlands also said it would amend the law to require coal-fired power plants to run at up to 35% of capacity. The Austrian government has also struck a deal with utility Verbund to convert a gas-fired power plant to coal-fired if Austria faces an energy emergency.
And fierce competition for dwindling coal supplies could lead to higher household electricity bills and power shortages in poorer emerging countries such as Pakistan. Coal, a commodity that many thought was on the verge of being obsolete, is seeing a remarkable resurgence due to surging demand.
A batch of coal for July delivery in Europe was at $421 a tonne on Friday, the highest level on record for the region, according to traders. Coal prices for delivery in Asia were also above $400 a tonne last week, traders added.