Coal price hits $648 a tonne due to energy crisis

One fossil fuel’s value jumped significantly due to escalating tension in Europe.

Newcastle coal futures recently soared to US$440 (A$648) a tonne, representing more than a 100 per cent increase on January 2022 prices.

These record-high figures were fuelled by a severe energy crisis spreading across the European Union. Russian state-owned Gazprom recently stopped supplying natural gas to the continent. This, combined with sanctions on buying Russian coal, forced up to 27 member countries to seek commodities from elsewhere.

The value of Australian coal is predicted to keep rising as the European energy crisis continues to worsen.

“A prolonged period of high prices may see Australia’s commodity forecaster lift its current $44 billion annual export estimate for 2022-23 once new predictions are tabled at the end of September,” News Limited reported.

“Whitehaven [Coal] in August booked a record $2B annual net profit and tipped thermal coal prices would remain at elevated levels, with European sanctions on Russian coal to take effect this month and disruptions to coal mines in the New South Wales’ Hunter Valley in July caused by bad weather.”

Whitehaven expects coal prices to remain elevated throughout 2023. High demand is also likely to continue for the unforeseeable future.

“Approximately 112 million tonnes of high-CV coal in seaborne markets is under threat by embargoes and restrictions on Russian coal. Europe and North Asia face a challenge in replacing Russian coal [as] sanctions are likely to divert high-CV Russian coal to markets that do not typically take high volumes of premium coal,” the company said in its latest full financial year results.

“It is likely to take several years before additional supply or alternative energy sources are available to rebalance global supply and demand dynamics.”

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