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Coal is now the world’s most expensive fossil fuel

Coal, the dirtiest and usually the cheapest option for energy,
is now the world’s most expensive fossil fuel.

Oil’s epic collapse over the past month means the global crude benchmark is now priced below the most widely traded coal contract on an energy-equivalent basis, according to Bloomberg calculations. Australia’s Newcastle coal on ICE Futures Europe settled at $66.85 a metric ton on Friday, the equivalent of $27.36 a barrel of oil. Brent futures ended at $26.98 a barrel.

While coal use in the U.S. and Europe has fallen because of cheap natural gas and renewables, as well as flat energy demand growth, consumption continues to rise in Asia, where it’s traditionally been the cheapest option for energy-hungry emerging markets. It’s also the dirtiest fossil fuel, emitting about twice as much carbon dioxide as natural gas and 30% more than gasoline when burned.

The new top price ranking, which is more a function of the sudden drop in crude prices than a surge in coal demand, must be sustained to incentivize switching plants and investments away from coal. In the short term, coal use in Japan could fall marginally this summer in favor of cheaper LNG, according to Goldman Sachs Group Inc.

The Newcastle contract represents coal for power generation use, which mostly has different supply and demand fundamentals than the oil market. Flight cancellations and travel restrictions may have slashed global petroleum use by as much as 20%, while Saudi Arabia and Russia are about to flood the market with extra supplies. That’s sent Brent down about 60% since the start of the year. Power markets in Asia that are the biggest customers for seaborne coal have been more resilient.

Newcastle coal, which is priced at Australia’s main loading port, has already been trading on an energy-equivalent basis above the Japan-Korea marker, the benchmark for liquefied natural gas in Asia, for most of this year.

Published by Bloomberg, 23 March 2020

This month's top international coal headlines

  • Coal Is Now the World’s Most Expensive Fossil Fuel — Bloomberg
  • India starts COVID-19 shutdown, with 'big hit' on coal expected — GlobalCOAL
  • Who cares if Standard Bank won’t stop funding coal mining? — Moneyweb
  • Richards Bay at 6-mth low on weak India demand, coronavirus fallout
    — McCloskey Coal Report
  • Eskom talks to get coal for Kusile plant drag on for 13 years — Bloomberg
  • Coal exceeds gas in Pakistan's power mix for third month: NEPRA — Platts CTI
  • Atlantic thermal coal markets face pressure from macro environment
    — Platts CTI
  • The global economy is headed for recession: Updated IHS Markit Economic Forecast on Impact of COVID-19 — IHS Markit
  • SA off-specs differentials to API4 widen — Argus Media
  • Weaker Indian demand for South African tons — Platts CTI
  • Higher Coal India supplies to help plants cut imports — The Economic Times
  • Developing nations may lose up to 85% of oil and gas income this year: IEA, OPEC — Reuters
  • Is coal the safe haven right now? It’s outshone gold in 2020 — Stockhead
  • Atlantic thermal coal markets expect weak pricing to remain for foreseeable future — Platts CTI
  • RB prices plummet to 6-month low on ample Indian supplies
    — Southern African Coal Report
  • South Africa experiencing 'national disaster' — Platts CTI
  • Coronavirus outbreak: Coal import declines 14% in Feb — Bloomberg Quint
  • Atlantic thermal coal falls further on plummeting oil prices, coronavirus; outlook bearish — Platts CTI
  • Oil price turmoil: How Saudi Arabia’s $100bn gambit could backfire
    — Middle East Eye
  • OPEC+ crude output: Who blinks first? — Argus Media
  • Exxaro says there’s value yet in holding the rights to export coal through RBCT — MiningMX
  • South African load shedding to continue indefinitely: Eskom — Platts CTI
  • Atlantic thermal coal prices remain steady despite the effects of coronavirus, downturn in crude oil — Platts CTI
  • Kenya presses on with coal energy despite mounting concerns — Platts CTI
  • Turkey thermal coal imports up 16% on year; South African share plummets 88%: Turkstat — Platts CTI
  • Atlantic thermal coal prices rebound after losses, outlook still bleak — Platts CTI
  • RB prices eye fresh 5-month lows on pressure from oil crash
    — Southern African Coal Report
  • Atlantic thermal coal prices sink on Saudi-Russia oil price war, COVID-19
    — Platts CTI
  • COVID-19 a "major economic shock" for China and Asia-Pacific — Platts CTI
  • SA coal output could flatline amid underinvestment
    — Southern African Coal Report
  • Moody's cuts Sasol to junk on rising debt — Company News
  • Atlantic thermal coal prices drop on macro-weakness related to coronavirus: sources — Platts CTI
  • Coal to remain key in Vietnam power expansion — World Coal
  • Which countries are planning a coal phase-out? — World Coal
  • South African thermal coal export output down 25% to 13 mil mt — Platts CTI
  • High-quality coal to remain in overall energy mix well into the future: Glencore — Platts CTI
  • Pakistan shipments 'halted on maintenance' — Platts CTI
  • Atlantic thermal coal prices bearish on cheap gas and resold ARA coal stocks
    — Platts CTI

2020 archive

February 2020
  • Sasol confirms making 600 MW own-gen proposal in response to DMRE RFI
    — Engineering News
  • Global coal majors set to exit SA, lack of funding leaves junior minors 'stuck': sources — Platts CTI
  • Atlantic thermal coal markets remain bearish as sellers look to remove oversupply — Platts CTI
  • Seaborne thermal coal prices head south as demand fades in Northern Hemisphere — Platts CTI
  • Some South African sellers offering “deeper” discounts on spot cargoes
    — Platts CTI
  • Atlantic thermal coal prices inch up despite limited spot demand, coronavirus fears — Platts CTI
  • South African coal losing to Russian on price basis — Platts CTI
  • European thermal coal prices fall to nearly multi-year lows — Platts CTI
  • India buyers favor South African coal as prices dip — Platts CTI
  • Falling prices to bring South Africa back into favour — Platts CTI
  • Indian sponge iron buyers in search of alternatives to 'overpriced' SA coal: sources — Platts CTI
  • RB prices set to fall further as Indian demand yet to recover
    — Southern African Coal Report
  • SA coal output could flatline amid underinvestment
    — Southern African Coal Report
  • Northwest Europe weak, Richards Bay trade volumes pick up
    — McCloskey Coal Report
  • Atlantic thermal coal prices slide as sources discuss ARA reloads — Platts CTI
  • Indian buyers support low-CV South African coal — Platts CTI
  • Atlantic thermal coal markets oversupplied as prices fall again — Platts CTI
  • Coal analysts questions Glencore's pledge to reduce Scope 3 emissions
    — Platts CTI
  • Eskom pricing puts domestic coal in 'direct competition' with export
    — Platts CTI
  • Tight supply, overvaluation by state utility, inflate South African coal prices
    — Platts CTI
  • Atlantic thermal coal prices remain flat on declining prompt demand, cheap gas — Platts CTI
  • RB prices eye fresh six-week lows — Southern African Coal Report
  • Glencore provides update on its transition to low-carbon economy
    — Mining Weekly
  • Coal futures rise sharply in afternoon session — Platts CTI
  • European thermal coal price rises, players predict correction lower
    — Platts CTI
  • South32’s Seriti deal at risk if Eskom fails to renegotiate underwater Duvha coal contract — Miningmx
  • Two coal producers look to help the state with Eskom — BusinessLIVE
  • South African coal maintains strong premium — Platts CTI
  • European thermal coal prices rise as long term outlook remains bleak
    — Platts CTI
  • Rising South African thermal coal prices suggest potential change in buying: trade — Platts CTI
  • 'New wave' of junior minors enter SA export market — Platts CTI
  • RB prices likely to come under pressure this week
    — Southern African Coal Report
  • SA producers pushing more supplies into export market
    — Southern African Coal Report
  • Structurally cheaper LNG should displace coal from Japan, and broader Asia: Russell — Reuters
  • Atlantic thermal coal prices fall on gas glut, redirected LNG cargoes
    — Platts CTI
  • Bad weather and falling demand put a damper on coal exports
    — BusinessLIVE
  • CRU: how the coronavirus affects global commodity markets — World Coal
  • Atlantic thermal coal prices fall at end of week — Platts CTI
  • Transnet plans to boost the volume of coal transported by rail to Eskom
    — Mining Weekly
  • South African, Botswana coal producers outline prospects for the industry
    — Mining Weekly
  • Chinese demand key uncertainty for seaborne coal market in 2020
    — Hellenic Shipping News
  • SA market sees ‘less and less’ production due to lack of investment
    — Platts CTI
  • SA coal market continues to be premium origin — Platts CTI
  • South African coal remains premium origin in seaborne market — Platts CTI
  • Atlantic thermal coal prices rise although market remains oversupplied
    — Platts CTI
  • European thermal coal prices edge upward with energy complex — Platts CTI
  • Richards Bay prices set to rise on India buying — Southern African Coal Report
  • Minister keen to get generation outside of Eskom going soonest
    — Mining Weekly
  • South African 6,000 NAR coal trades at large premium — Platts CTI
  • Atlantic thermal coal markets remain pressured by gas, oversupply
    — Platts CTI
January 2020
  • Minerals Council calls for coal advocacy group to be established
    — Mining Weekly
  • Govt urges coal sector to step up pace in rolling out clean technologies
    — Mining Weekly
  • Investments in clean coal could save South Africa's coal sector
    — Consultancy.co.za
  • South African thermal coal mood ‘bearish’ amid production drop, rising prices — Platts CTI
  • Cheap Natural Gas Is About to Kick More Coal Out of Europe — Bloomberg
  • NW Europe falls to 7-month low, Richards Bay also down
    — McCloskey Coal Report
  • Coal futures climb, South African prices still well supported — Platts CTI
  • India’s thermal coal imports extend fall as economy slows — World Coal
  • Unprecedented Industrialization Responsible for Uptick in Coal Trading Activities — Coal Trading Market
  • RBCT looks to increase exports from junior miners in 2020 — Miningmx
  • RBCT coal exports decline again — Mining Weekly
  • Gas Exports Have a Dirty Secret: A Carbon Footprint Rivalling Coal’s
    — Bloomberg
  • India cautious over volatile South African coal — Platts CTI
  • "Overvalued" SA begins retreat — Platts CTI
  • RB prices at one-year highs, buyers eye cheaper option
    — Southern African Coal Report
  • South Africa physical keeps firm premium to futures — Platts CTI
  • FOB Richards Bay OTC drops 3% on year — Platts CTI
  • Richards Bay corrects — Platts CTI
  • Indian seaborne interest — Platts CTI
  • US Department of Energy announces funding for fossil energy research and training — World Coal
  • Arbitrage to remain open in SA — Platts CTI
  • BlackRock Inc. will cut exposure to thermal coal — Bloomberg
  • SA prices -- correction in the offing? — Platts CTI
  • Indian thermal coal buyers keep eyes peeled on arbitrage opportunities
    — Platts CTI
  • India looks to replace up to 135Mt of coal imports with domestic output: minister — S&P Global
  • SA prices ease — Platts CTI
  • Atlantic thermal coal markets relatively static amid ‘retreating’ South Africa market — Platts CTI
  • South Africa price stable even with vessel backlog — Platts CTI
  • Richards Bay discounts — Platts CTI
  • SA 'overpriced' bids continue to rally — Platts CTI
  • South African prices a key factor — Platts CTI
  • Colombia-Asia thermal coal arbitrage widens on high South African prices
    — Platts CTI
  • South Africa bids 'aggressive' once more — Platts CTI
  • Tightness heard in South Africa — Platts CTI
  • South African coal remains premium origin — Platts CTI
  • High-CV blending in India — Platts CTI
  • SA bids start to 'roof' again — Platts CTI
  • SA market relatively static — Platts CTI
  • Atlantic physical thermal coal markets quiet with slight price falls — Platts CTI
  • European thermal coal markets begins year with 'no movement': sources
    — Platts CTI

2019 archive

 

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