LAUNCESTON, Australia, June 12 (Reuters) – Whenever coal prices decline it’s tempting for those opposed to the polluting fuel to think that demand is falling amid a move to cleaner renewable energies, but in the current cycle it appears oversupply is the main culprit.
Coal prices in Asia, especially the benchmark thermal grade at Australia’s Newcastle Port, have come under pressure in recent weeks, even as coal exports have actually been rising.
The weekly Newcastle price, as assessed by commodity price reporting agency Argus, dropped to $72.01 a tonne in the week to June 9, the weakest in two years and down 40% from its seven-year peak of $119.74 in July last year.
Lower-quality Indonesian thermal coal with an energy value of 4,200 kilocalories per kilogram, as assessed by Argus, has fared somewhat better than Newcastle supplies, but it has also struggled in recent weeks.
Indonesian coal dropped to $36.66 a tonne in the week to June 7, down from this year’s high of $40.32 in March and some 28% below the 6-1/4-year peak of $51.04 hit in February 2018.