Coal Prices Plummeted in the First Half of 2023, Cheaper Than Before the War

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Adi Ahdiat 07/07/2023 13:28 WIB

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According to World Bank data, coal prices plummeted during the first half of 2023. They are now lower than before the outbreak of the Russia-Ukraine war.

Average Monthly Newcastle Coal Price (January 2020-June 2023)

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Coal Prices Plummeted in the First Half of 2023, Cheaper Than Before the War

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Average Monthly Newcastle Coal Price (January 2020-June 2023)

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Coal prices plummeted in the first half of 2023, after soaring to record highs last year.

According to World Bank data, in June 2023, the average price of Newcastle coal was USD 139.42 per ton.

This price is down approximately 13% compared to May 2023 (month-on-month/mom), down 56% compared to January 2023 (year-to-date/ytd), and down 62% compared to June 2022 (year-on-year/yoy).

Coal prices surged dramatically last year, reaching record highs.

This price increase was influenced by rising demand as the global economy recovered from the pandemic, further fueled by the outbreak of the Russia-Ukraine war at the end of February 2022.

However, coal prices are now normalizing, and are even cheaper than before the Russia-Ukraine war, as shown in the graph.

In its April 2023 Commodity Markets Outlook report, the World Bank projects that coal prices will continue to fall until 2024.

The average price of Newcastle coal this year is estimated to reach USD 200 per ton, and USD 155 per ton next year.

"Coal prices are expected to fall by 42% in 2023 and a further 23% in 2024. However, prices remain well above the 2015-2019 average," said the World Bank.

According to the World Bank, global coal demand is weakening this year, influenced by carbon pricing policies and lower natural gas prices in several major consuming countries, particularly the United States and Europe.

"The Russian invasion of Ukraine has strengthened incentives to shift away from fossil fuels, both through increased renewable energy production and reduced energy consumption, particularly in the United States and Europe," said the World Bank.

"This is driving projections that US and European coal consumption will continue to decline," it continued.

On the other hand, there are also several conditions that could potentially boost coal prices this year.

"In the short term, if China's economic recovery is stronger than expected, it will increase demand for imported coal for industry and power plants," said the World Bank.

"If there is a production decline, or a cut in coal exports from Russia, this could also increase prices," it continued.

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."