NSW thermal coal charges up as demand rises

Newcastle thermal coal futures have risen to their highest price since July 2018 at $US121.25 ($156.50) per tonne on Wednesday, off the back of increased demand for the commodity in Asia.

The price rise marked a 93 per cent increase in the past year, closing at $US120.50 per tonne

The Australian Bureau of Statistics (ABS) last week recorded an 8 per cent increase to Australian coal exports in April 2021, which increased by $287 million.

Coal exports to India led the charge, which rose by 167 per cent ($116 million) in April.

“Australian coal exports to India have been steadily rising since mid-2020, following a substantial reduction in Chinese demand for Australian coal,” the ABS stated.

The stronger conditions have also been reflected by New Hope Group, which also stated last week that its monthly average thermal coal price at its New South Wales operations has increased by 78 per cent since September 2020.

Tensions between Australia and China, however, have continued at the expense of Australia’s coal exports.

In May, China announced it had suspended economic communications with Australia.

“Recently, some Australian Commonwealth Government officials launched a series of measures to disrupt the normal exchanges and cooperation between China and Australia out of Cold War mindset and ideological discrimination,” the NDRC stated.

“Based on the current attitude of the Australian Commonwealth Government toward China-Australia cooperation, the National Development and Reform Commission of the People’s Republic of China decides to indefinitely suspend all activities under the framework of the China-Australia Strategic Economic Dialogue jointly held by the National Development and Reform Commission of the People’s Republic of China and relevant ministries of the Australian Commonwealth Government.”

Wood Mackenzie principal analyst Shirley Zhang said China’s ban on Australian thermal coal will continue to show its impacts.

“The ban is already in place and has affected trade flows and seaborne prices over the past six months. It is hard to define the impacted timeframe of the “indefinite suspension” at different negotiation stages,” Zhang said.

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