LAUNCESTON, Australia, June 8 (Reuters) – Thermal coal prices across Asia have surged to multi-year highs amid strong demand and some supply constraints, but some types of the fuel have done better than others.
The headline-grabbing rally has been for high-quality Australian thermal coal. The weekly index for 6,000 kilocalorie per kilogramme (kcal/kg) coal at Newcastle Port ARGMCCINDX=ARG, as assessed by commodity price reporting agency Argus, hit $121.40 a tonne in the seven days to June 4.
This was the highest in more than a decade. This grade has now climbed 49% since the end of last year, and 162% from its 2020 low of $46.37 a tonne in September, reached amid the economic fallout from coronavirus lockdowns across Asia.
The driver for the price increase has been strong demand from Japan and South Korea, the main buyers of high-grade Australian thermal coal, amid expectations for a warm northern hemisphere summer that will bring surging power demand for air-conditioning.
It’s worth noting that the Newcastle Index reflects a price for relatively small volumes of coal. The bulk of this grade is bought under short- and medium-term contracts, rather than in the spot market.