Coal prices in Asia at record highs

Coal prices in Asia reached record highs as disruptions in supply added new risks to the already crisis-ridden global energy sector.

According to the index compiled bi-weekly by OPIS, coal loaded in the Australian port of Newcastle reached an all-time high at $436.71 per tonne on the spot market. Thus, the prices have tripled.

Forward prices were also at record levels. Newcastle October futures rose 5 percent on the first trading day of the week to $463.75 a tonne on ICE Futures Europe, reaching the highest level in data dating back to January 2016. Europe's reference coal price is also trading at record levels.

Uncertainty regarding gas flows to Europe and the forecast of stronger coal demand from the continent stand out as factors that continue to increase fuel prices. On the other hand, it is stated that a third La Nina hurricane may occur in Australia towards the end of the year and that there is a possibility of deterioration of weather conditions in the coal mines.

Previously, the La Nina hurricanes, which lived in 2010-11 and lasted for several months, caused the coal mines and railways in Australia's New South Wales and Queensland states to be damaged by heavy rainfall and caused production to drop by 20 to 30 percent.

“Any serious cut in Australian coal shipments could push high-heat coal prices to new heights,” Morgan Stanley analysts, including Marius van Straaten, wrote in a passing note.

A strong recovery in coal demand was seen as a result of the contraction in global gas supply as some buyers avoided fuel imports from Russia and investment in other sources, including renewables, in many countries slowed down.