The end of Coal Price Rush

It’s a catch 22 situation. At one end we want to curb greenhouse gases and on the other we crave for cheap power and source of energy for industrial units.

The coal is widely considered the cheapest source to produce energy but at the cost of damaging our environment as it’s the dirtiest one, harming our very existence. The demand for electricity surged as global economy recovered from the pandemic and winter is forthcoming.

China tried put its act together and on 27th Oct officials met with coal producers to agree on measures to fix pricing [read more]. Other measure by The National Development and Reform Commission (NDRC) was looking into the costs and profitability of the coal sector in an effort to work out a mechanism to guide prices to move within a reasonable range. As China is the world’s biggest producer and consumer of coal, and to meet demand, it has been increasing output but further improvement needs to be seen on supply side. With this intervention good news came on 1st Nov from NDRC that “China has seen significant improvement in its coal supply as production has greatly expanded and prices have stabilized”.

This raises the question that is free economy model really up to the mark to provide best prices for the consumers or can it be mangled by group of producers in the name of logistics issues post pandemic to cover loss during lockdowns and to let them become profiteers without repercussions.
The South African coal API4 was trading at $60 year ago on 2nd Nov 2020, it peaked to $238.25 on 6th Oct 2021, and now it’s at $129.9 on 2nd Nov 2021. Let’s hope that the super cycle is over and we are back to normalization.