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COAL - JAKARTA. Coal prices have seen a resurgence on Sunday (21/4), driven by ongoing tensions in the Middle East and a surge in demand and imports from China.
According to Trading Economics, coal prices rose by 0.53%, reaching a level of US$ 141.75 per ton, on Sunday (21/4) at 21.00 WIB. In fact, coal prices have seen a weekly increase of up to 5.98%.
Commodity and Currency Observer Lukman Leong attributes the rise in coal prices to the ongoing war in the Middle East, such as the Iran-Israel conflict, which has led to high crude oil prices. This, in turn, has impacted the prices of its derivatives, including coal.
“This increase could be temporary due to geopolitical factors. Once these subside, coal prices are predicted to fall again,” Lukman told Kontan.co.id on Sunday (21/4).
Lukman also pointed out another sentiment driving the continuous rise in coal prices: the increasing demand from coal-fired power plants in China and a surge in demand from India.
“China's coal industry has seen a significant increase in imports this year, a trend that has been recorded since the first quarter of 2024,” he added.
He noted that China's imports of all types of coal from overseas markets reached 97.43 million metric tons in the first quarter of 2024, a 16.9% increase from 83.36 million tons during the same period in 2023.
Furthermore, Lukman stated that China began implementing a surge in coal-fired power plant permits in line with the wave of power shortages in 2021. This move came as China continued to worry about energy security following a decrease in domestic coal and the occurrence of power shortages in 2021.
Not only that, Lukman said that China has also pledged to strictly control the capacity of new coal-fired power plants, and has connected a large number of new wind and solar power plants to its power grid.
“These fundamental needs are what ultimately drive global coal prices to continue rising,” he revealed.
Lukman predicts that coal prices will trade between US$ 100 - US$ 150 per ton by the end of the first half of 2024. By the end of the year, coal prices are expected to hover around US$ 85 - US$ 200 per ton.
Meanwhile, Equity Research Analyst at Kiwoom Securities Indonesia, Miftahul Khaer, believes that global coal prices will remain under pressure in 2024 and 2025.
“Although global coal prices have strengthened recently, we believe that several key sentiments will continue to suppress global coal selling prices,” Miftahul told Kontan.co.id on Friday (19/4).
Miftahul projects that global coal prices will only be around US$ 117 per ton throughout this year, which is lower than the average price throughout 2023, which was at a level of US$ 172.05 per ton.
“Not only that, this estimate is considered the lowest since June 8, 2021. The projection of prices still being at a high level compared to pre-pandemic levels is based on the possibility of future financial easing policies,” he said.
