The price of coal at the port of Newcastle, Australia in September 2020 was $67/ton, but currently, the price is $307/ton.
Australia is the world’s largest coal exporter in 2020, accounting for 39.5% of the world.
Each ton of coal exported from the port of Newcastle in September 2020 was only $67/ton, but now it has reached $307/ton, nearly 5 times higher. A few weeks ago, the price of this commodity was even at the level of 360 USD/ton, an unprecedented level, surpassing the historical peak previously recorded in 2008 with 267 USD/ton.
This means coal companies in Australia are making unprecedented profits because of soaring prices. According to calculations by World Top Exporters, Australia is the world’s largest coal exporter in 2020, accounting for 39.5% of the global figure.
Why is coal price record high?
The three main factors affecting coal prices recently are increased demand in China, high gas prices and supply shortages. Accordingly, China’s thermal coal production increased by only 6% this year but demand increased by 14%, while China banned coal imports from Australia, which supplies a large amount of coal to the world’s most populous country. On the other hand, high gas prices make the dependence on coal more and more large.
Normally, commodity prices rise due to increased demand, prompting investors to invest money in the industry to increase output, and prices will go down because of more abundant supply. However, coal is different, when statistics show that thermal coal prices go up, but during the past 5 years, production capacity has decreased. According to a domino effect, with low supply, coal prices will remain high.
In fact, the more expensive coal is, the more investors pour money into cheaper renewable materials. Countries like China and India will find renewable energy sources to replace coal, such as solar power.
Expert Tim Buckley from the Institute for Energy Economics and Financial Analysis (USA) said that high coal prices are like a “headwind” for Australia but not a reason for the country to build new coal mines. “If new coal mines are not opened, production will go down over time,” Mr Buckley said.
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