If the war and El Niño subside, coal prices are predicted to fall.

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Adi Ahdiat 31/10/2023 16:00 WIB

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The World Bank projects coal prices to fall until 2025, assuming no escalation of the Israeli-Palestinian conflict and no prolonged El Niño.

Average Projected Newcastle Coal Price per Year according to the World Bank (2021-2025)

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If the war and El Niño subside, coal prices are predicted to fall.

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Average Projected Newcastle Coal Price per Year according to the World Bank (2021-2025)

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The World Bank projects a decline in coal prices during 2023-2025, assuming the Israel-Palestine conflict does not escalate to other regions and there is no prolonged El Niño.

This is noted in the October 2023 edition of their *Commodity Markets Outlook* report.

"Assuming no escalation of the conflict in the Middle East, coal prices are projected to fall 49% (year-on-year/yoy) in 2023, down 26% (yoy) in 2024, and down another 15% (yoy) in 2025, but still remaining well above the average price of 2015-2019," the World Bank stated in its report.

The World Bank forecasts a decrease in coal prices due to declining consumption levels and increasing production.

"Coal consumption is expected to decline in the power sector due to strong growth in renewable energy and low-cost natural gas," the World Bank said.

"Coal production is expected to outpace consumption, with strong production growth in the three largest producing countries: China, India, and Indonesia," it continued.

However, several factors could drive up coal prices, namely the Israel-Palestine war and the El Niño weather phenomenon.

"An escalation of the conflict could drive up coal prices if it increases natural gas prices," said the World Bank.

"Furthermore, weather disruptions such as heatwaves and droughts caused by El Niño could push coal prices higher. El Niño could increase electricity demand while simultaneously reducing the supply contribution from hydroelectric power plants," it added.

Editor : Adi Ahdiat

"Disclosure: This is an AI-generated translation of the original article. We strive for accuracy, but please note that automated translations may contain errors or slight inconsistencies."