FX.co ★ Coal Extends Plunge to 4-Year Low

In April, Newcastle coal futures declined to $94 per tonne, marking a 25% decrease so far this year and reaching the lowest level in four years. This drop occurred amid a climate of decreased demand coupled with abundant supply from the globe's leading producers. A relatively warm winter experienced in China and other significant Asian importing nations led to a reduction in demand for power generation, which in turn caused seaborne coal prices to fall significantly as the quarter began. This situation was exacerbated by a 1.3% year-on-year decline in output from Chinese fossil-fuel power plants during the initial two months of the year. Nonetheless, coal production has continued to be strong. Indonesia reported a record output of 836 million tonnes last year, surpassing its initial goal by 18%, despite rising investments in alternative energy sources limiting the demand for thermal coal. Furthermore, China has planned a 1.5% increase in production to reach 4.82 billion tons this year, following a substantial output in 2024. This occurs despite high stockpiles within China and neighboring Asian countries at the onset of spring, necessitating price reductions by miners in an effort to secure buyers.