A key coal benchmark for Asia rose to the highest level in nearly two years as Indonesia’s new export rules delayed shipments, tightening supplies just as demand for the power-plant fuel rises with the onset of summer.
The Australian Newcastle coal futures for June rose 1.5% to $151 a ton on Monday, the highest intraday level for a front-month contract since May 2024.
Indonesia said last month it would take control of shipments of key commodities, including coal, and a new system implemented in June has sown confusion, resulting in delays of deliveries from the world’s top coal exporter. This has pushed up expectations that Australian supply would help fill the gap.
Demand for coal is also expected to rise over the next few months as hotter weather hits northeast Asia, increasing use of air-conditioning in major consuming markets like China.
Meanwhile, countries like Japan are also expanding coal use in order to slash reliance on liquefied natural gas, after the closure of the Strait of Hormuz and attacks on the largest export plant in Qatar disrupted about 20% of global flows. Coal-fired power plants in Japan - a key Australian buyer - have been running at a higher rates compared with last year, according to data compiled by Bloomberg.
The forward curve for the Newcastle contract has flipped into a backwardation structure, when prices in the near-term are higher than in the future, signalling a tighter market.
Rystad Energy expects coal consumption in Asia to rise by close to 70 million tons in 2026, assuming a sustained tight gas market scenario, driven by power plants running at higher utilization rates, according to an emailed note. - Bloomberg
