Coal prices may surge to fresh highs on possible further disruption

COAL prices in Asia could surge to fresh highs as disruption in Australian production added to risks to the energy sector that is already engulfed by crisis.

Spot physical coal loaded at Australia’s Newcastle port was priced at $436.71 a ton on Friday, an all-time high, said Bloomberg News. That’s nearly triple the price this time last year.

Newcastle futures for October jumped 5% to $463.75 a ton Monday, according to ICE Futures Europe, to the highest price in data stretching back to January 2016. Europe’s benchmark coal price is also trading at a record.

Uncertainty over gas flows to Europe and forecast stronger coal demand from the continent is continuing to propel prices of the fuel, said Bloomberg News. There’s also a prospect of weather disruptions at mines in Australia, a key global supplier, with a third straight La Nina forecast for late 2022 likely to deliver heavier rainfall, it added.

“Any severe disruptions to Australian coal shipments could push the high-calorific value price even to fresh highs,” Morgan Stanley analysts including Marius van Straaten said in a note.

Some previous La Nina periods have seen coal mines and railroads in Australia’s New South Wales and Queensland states disrupted by heavy rainfall, and output fell by an estimated 20% to 30% in a particularly severe weather event that spanned several months in 2010 and 2011, the newswire said.