Asian coal prices fall to fresh four-year low on trade war fears
Asia’s coal price benchmark fell to a four-year low as trade tensions threaten to sap demand, testing levels where miners shut more production.
Australian Newcastle futures declined to $94.25 a ton on Thursday, the lowest for a front-month contract since May 2021. Seaborne coal prices have collapsed in recent months after milder winter weather curbed demand in China and other major Asian importers.
China’s fuel oversupply was exacerbated by a drop in output from thermal power plants in the first quarter, while coal production hit an all-time high last month. And a tit-for-tat trade war between the world’s two largest economies threatens economic growth and consumption of coal.
“We expect the seaborne market to track sideways for a while as the effects of global trade disruptions play out,” said Steve Hulton, senior vice president of coal markets at Rystad Energy. “However, in our view, the likely price direction is up as there are producers at the top end of the cost curve who are hurting at prices below $100 per ton.”
Chinese spot coal prices are near the rates of long-term contracts set by the government, according to the China Coal Transportation and Distribution Association, a theoretical bottom for the market.
That, along with with action from producers to cut back output, could slow price declines. Glencore Plc, the world’s biggest coal shipper, said last month that it is cutting planned production at its Cerrejon mine in Colombia to halt a prolonged collapse in prices.
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