FX.co ★ Coal Edges Higher from 4-Year Low

Newcastle coal futures have experienced an increase to $97 per tonne, recovering from their four-year nadir of $93.7 established on April 23rd. This uptick is attributed to temporary concerns regarding reduced supply from Australia, which countered the bearish influences from abundant Asian production and weak demand. Whitehaven has reported that export activity faced setbacks in April due to adverse weather conditions in the previous March quarter. Concurrently, the United States has eased restrictions on its state lenders, enabling them to extend loans to coal plants. However, despite these developments, futures have declined by 20% this year. The primary driver behind this reduction is a milder winter in China, which curtailed the typically high heating demand for power, thereby impacting the exports of thermal coal. This scenario has exacerbated the annual 1.3% decline in production from Chinese fossil-fuel power plants observed in the first two months of the year. In addition, Indonesia achieved a record production high of 836 million tonnes last year, surpassing its initial goal by 18%, although increasing investments in alternative energy sources have limited the demand for thermal coal. Looking ahead, China plans to increase its coal output by 1.5%, reaching 4.82 billion tons this year, following a record production volume in 2024.