Underlying drivers for fuel prices remain intact despite a softening in Europe’s market
All fossil fuels are not created equal. Take thermal coal, which is burnt in power stations to produce electricity. It almost defies categorisation as a commodity because differences in quality vary markedly from region to region.
Coal produced in Australia’s Hunter Valley, for example, commands a higher price than material mined in Indonesia or some parts of South America because of its high calorific value and low impurities.
That makes generalisations about the near 1bn-tonne-a-year seaborne thermal coal market — an important source of income for miners including Glencore, Anglo American and BHP Billiton — fraught with risk.
Since February, thermal coal has suffered a dramatic fall in price in some parts of the world, skidding to levels previously seen in 2016.
Rising supplies of cheap liquefied natural gas, which is a cleaner burning alternative to coal; a mild winter in parts of the northern hemisphere, and apparent moves by Chinese customs officials to limit imports are to blame for the sell-off, according to analysts and traders.
For the rest of this column: https://www.ft.com/content/f1b3592c-6034-11e9-b285-3acd5d43599e