India, Germany, China Many Sink Coal Prices

Jakarta, CNBC Indonesia– Coal prices are sinking. On Wednesday’s trade (15/3/2023), the coal price for the April contract on the ICE Newcastle market closed at US$ 179.65 per ton. The price is sloping 0.19%.

This price is the lowest since February 20, 2023.

Yesterday’s decline extended the negative trend in coal prices which also weakened on Monday this week. In the last four trading days, black sand prices have fallen 6.9%.

Coal prices plunged after India and Germany sent bad news.

Minister of Electricity of India RK Singh said Ganges State will reduce the contribution of power generation to energy from the current 72.3% to 58.9% in 2026-2027 and continue to fall to 49.9% in 2031-2032.

Referring to studies Central Electricity Authority (CEA), installed liginite generating capacity decreased from 51.27% to 28.7% until March 2023.

India is the second largest consumer of coal in the world after China. The need for coal exceeds 1 billion tons more.

Besides India, Germany will also reduce coal electricity production.

As part of the plan, the German government will close the LEAG coal mine at the end of 2030. The closure plan is eight years ahead of the initial plan of 2038.

Germany has already spoken to LEAG about the closure. LEAG is the owner of the second largest mine in Germany.

The German government previously reached an agreement with power producer RWE AG to go coal-free by 2030.

Germany has ambitions to reduce emissions by two-thirds from current levels and generate 80% of its energy from new and renewable energy. The contribution of coal power plants is currently around 30% of the total electricity produced by the country.

Previously, China had also given bad news. China announced a production increase in January-February 2023.

China is also not expected to buy coking coal from Australia on a large scale due to the still sluggish industry and the high price of coking coal.

China’s coal production reached 734.23 million tons in January-February 2023. This amount increased by 5.8% compared to the same period the previous year.
This increase in production makes China optimistic that it can meet the demand for thermal coal and can reduce imports.

With weakening imports, coal prices will continue to be depressed considering that China is the largest coal consumer in the world.

CNBC INDONESIA RESEARCH

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