Coal prices have strengthened again at the start of the week. On Monday’s trade (1/5/2023), the coal price for the June contract on the ICE Newcastle market closed at US$ 187.6 per ton. The price strengthened 1.32%.
This strengthening erased the negative trend of coal whose prices had weakened in the previous two trading days.
Coal prices are back on fire after a heat wave hit the Asian region. However, on the other hand, increases in India’s and Indonesia’s production could put pressure on coal prices going forward.
As is known, in the last two weeks, the Asian region was hit by a heat wave above 37 degrees Celsius and even 50 degrees Celsius,
India, Bangladesh, Myanmar and Thailand are among the countries hit by the heat wave.
These countries also rely heavily on coal as a source of electrical energy. It is no wonder then that the demand for imports has increased.
The temperature has indeed decreased in several countries but has not fully returned to normal. Some analysts also predict that the peak of the heat wave has passed but temperatures are still hotter than the annual average.
India as the second largest coal consumer in the world has actually prepared better for summer.
India’s coal production jumped to 73.02 million tonnes in April 2023. This amount jumped 8.67% (year on year/yoy) and was the highest on record for the April period.
SOE Coal India contributed 57.57 million tons of production. The increase in production helps India to secure supply during this year’s hot season.
However, imports are also expected to remain high due to the large demand for electricity. Summer in India will still last till June so they have to ensure the supply is safe.
Last year, India was hit by an energy crisis during the summer due to high demand.
In the midst of a surge in demand, exports from Indonesia are expected to increase after production returns to normal. Production is estimated to have fallen due to the long Eid holiday on April 19-25.
