Passa ai contenuti principali

Coal Prices Jump To Near Decade High In Europe On Supply Crunch

Coal prices in Europe have soared to a nine-year high due to a combination of increasing demand and supply constraints.

Prices for front-year coal futures on ICE Futures Europe breached the $101 per ton mark, hitting levels not seen since 2012, according to Bloomberg. 

This summer, demand for coal power generation has surged amid record heat waves across Europe and natural gas prices surging. Coal has become a much cheaper form of power generation since Russia has tighten gas markets and caused a supply storage crunch. 

Fonte: Bloomberg

Supplies of coal are dwindling as power companies are building stockpiles ahead of Europe's winter heating season. At the same time, coal supplies from some emerging market countries have been disrupted due to social unrest and logistical issues. 

Coal prices worldwide have surged this year. Prices for coal exported from Australia are at decade highs, while costs of coal imported into Europe from China have also risen. 

The latest International Energy Agency report shows coal-fired electricity production will increase 3% in 2021 and 3% next year after declining by 4.6% last year. Not so ESG-friendly considering the continent is trying to decarbonize. 

"Normally you have enough supply elasticity in the coal market that whatever happens in the gas market doesn't affect coal that much," said James Waddell, head of European gas at Energy Aspects Ltd. "But because stocks are so low in Europe, and you don't have any mechanism to bring more supplies quickly, gas is having a reciprocal effect on the coal market."

European front-month and front-quarter coal contracts have been trading above $100 per ton since mid-June. The continued supply issues are elevating prices for next year. 

"Markets may have enjoyed decent demand but frequent supply disruptions also continued, reducing the ability to replenish depleted storage," said Andy Sommer, head of fundamental analysis and modeling at Swiss trader Axpo Solutions AG, in a report on Monday. "On the coal side, this was caused by social unrest and railway issues in Colombia and South Africa."

Suppose power generation companies are paying near-decade highs for coal and natgas. In that case, this means higher electricity prices will be passed down to European households, raising concerns that financially stretched households may feel the burn from higher electricity costs. 


Commenti

Posta un commento

Post popolari in questo blog

Fwd: The Looming Bank Collapse The U.S. financial system could be on the cusp of calamity. This time, we might not be able to save it.

After months  of living with the coronavirus pandemic, American citizens are well aware of the toll it has taken on the economy: broken supply chains, record unemployment, failing small businesses. All of these factors are serious and could mire the United States in a deep, prolonged recession. But there's another threat to the economy, too. It lurks on the balance sheets of the big banks, and it could be cataclysmic. Imagine if, in addition to all the uncertainty surrounding the pandemic, you woke up one morning to find that the financial sector had collapsed. You may think that such a crisis is unlikely, with memories of the 2008 crash still so fresh. But banks learned few lessons from that calamity, and new laws intended to keep them from taking on too much risk have failed to do so. As a result, we could be on the precipice of another crash, one different from 2008 less in kind than in degree. This one could be worse. John Lawrence: Inside the 2008 financial crash The financial...
Posta un commento
Continua a leggere

3 Reasons Why Gold Will Outperform Equities And Bonds

3 Reasons Why Gold Will Outperform Equities And Bonds https://www.forbes.com/ 3 Reasons Why Gold Will Outperform Equities And Bonds For centuries, gold has played a major role in human history and has become interwoven into the financial fabric of society. Beyond its investment following, gold has become synonymous with wealth. Historically, gold's early use cases revolved around money – a form of "medium of exchange". After the second world war however, several countries and their respective currencies, started to shift away from the gold standard and migrated towards a fiat currency system. Today, gold remains largely a "Store of Value", and due to its unique properties and large number of use cases, it has managed to distance itself from other asset classes in terms of correlation, demand / supply drivers, and investment purpose. Gold's idiosyncrasies function as a double-edged sword, as it is challenging to predict ...
Posta un commento
Continua a leggere

China Market extends fall on talks of less stimulus

Headline indices of the Mainland  China  equity market closed down for second straight day on Tuesday, 23 April 2019, as profit booking selloff continued after a flurry of comments from policymakers signaled they're less comfortable about adding stimulus. At closing bell, the benchmark Shanghai Composite Index declined 0.51%, or 16.45 points, to 3,198.59 The Shenzhen Composite Index, which tracks stocks on China's second exchange, fell 1.32%, or 23.05 points, to 1,728.86. The blue-chip CSI300 index shed 0.16%, or 6.60 points, to 4,019.01.  Top-ranking policymaking bodies including the Politburo, the State Council, the central  bank  and the  Central Financial and Economic Affairs Commission  have all held meetings in the last two weeks.  China  should fine-tune monetary policy in a pre-emptive way based on economic growth and price changes, according to a top-level meeting reports chaired by  President  Xi Jinping.  Monetary po...
Posta un commento
Continua a leggere