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Asian coal, gas markets roar into top gear as region revs up demand

June 14, 2018 00:00:00


SINGAPORE, June 13 (Reuters): Thermal coal and gas prices have coursed into a bull run, propelled by particularly strong demand across Asia.

Electricity consumption is also surging thanks to healthy economic growth just as seasonal needs rise with the start of summer.

Spot thermal coal cargo prices for export from Australia's Newcastle terminal last settled at $117 per tonne, the highest level since February 2012. That is up by more than 130 per cent from 2016's record lows.

Coal prices have not just been pushed up by firm demand, which has recovered from 2015 lows, but also by several mine closures and weak investment into capacity expansion.

In gas markets, spot prices for Asian liquefied natural gas (LNG) are at almost $10 per million British thermal units (mmBtu) - a 2018 high, and up by 145 per cent from 2016 troughs.

"Japanese and South Korean (LNG) storage ended the winter at the lowest levels for at least five years," said Nicholas Browne, senior gas analyst at energy consultancy Wood Mackenzie.

"Given the strength of Chinese demand last winter, Japanese and Korean buyers utilities want to ensure that storage is full before the winter of 2018/2019 to avoid being caught out, said Browne.

A procurement official at a Japanese utility said power generators were also stocking up their coal reserves ahead of high electricity demand in summer as the nation switches on air conditioning.

Delays in restarting off-line nuclear power stations in Japan and South Korea also pushed prices higher, Browne said, adding that he saw "spot Asian LNG prices ending the year at close to $12 per mmBtu".

Thermal coal and gas are the most commonly used fossil fuels for electricity generation.

Fuel oil, used in Asia for power generation as well, has also seen a recent boom.

The surge in prices is costing utilities dearly in North Asia's economic powerhouses. The world's second- and third-biggest economies, China and Japan respectively, rely heavily on imports, as does South Korea.

"The current market-based coal price is almost unbearable for us," said a senior official with China's second-largest utilities operator China Huaneng Group, declining to be named because he wasn't authorised to speak to media.

He added, however, that strong industrial demand for electricity was in turn generating healthy revenue, and that cheaper long-term coal supply contracts under government price controls were shielding the company from some of the high import costs.

The bull run in fuel demand and prices is a boon for producers.

Australia's Whitehaven Coal has seen its share price chasing records for much of this year. Meanwhile LNG specialist Santos in May fended off a $10.8 billion takeover bid by an investor group that was keen to get a share in the booming market.

Coal and gas usually take their lead from oil markets, yet that's not been the case recently.

Although oil prices have also risen this year, in part due to healthy demand but mostly because of voluntary production cuts led by producer cartel OPEC.

But crude markets have more recently come under pressure following rising output from all three of the world's top producers, Russia, the United States and Saudi Arabia.


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COMPANY YCP HIGH LOW CLOSE %CHG
PARAMOUNT 17.0 18.7 16.7 18.7 10%
GLOBALINS 12.8 14.0 12.7 14.0 9.375%
MEGHNACEM 91.1 99.9 92.1 98.1 7.6839%
PROVATIINS 16.4 17.7 16.5 17.5 6.7073%
PURABIGEN 12.4 13.5 12.5 13.2 6.4516%
ASIAINS 16.7 17.7 17.0 17.6 5.3892%
KARNAPHULI 15.0 15.9 15.0 15.8 5.3333%
REPUBLIC 25.1 27.2 25.3 26.4 5.1793%
MIDASFIN 23.1 24.4 23.3 24.2 4.7619%
PRIMEINSUR 12.7 13.6 12.9 13.3 4.7244%
COMPANY YCP HIGH LOW CLOSE %CHG
GLOBALINS 14.0 14.0 12.7 12.7 10.2362%
PARAMOUNT 18.7 18.7 16.7 17.0 10%
GREENDELT 58.9 59.0 52.5 54.0 9.0741%
PURABIGEN 13.3 13.5 12.5 12.5 6.4%
PROVATIINS 17.4 17.7 16.5 16.5 5.4545%
MEGHNACEM 97.0 99.9 92.1 92.1 5.3203%
IFIC1STMF 4.2 4.2 4.0 4.0 5%
POPULAR1MF 4.2 4.2 4.0 4.0 5%
DAFODILCOM 34.9 35.1 33.3 33.3 4.8048%
FASFIN 13.5 13.6 12.8 12.9 4.6512%
COMPANY YCP HIGH LOW CLOSE %CHG
ALLTEX 14.0 14.4 12.6 12.6 -10%
AL-HAJTEX 98.2 105.3 88.4 88.4 -9.9796%
ISNLTD 31.5 28.4 28.4 28.4 -9.8413%
CAPMIBBLMF 11.5 11.6 10.4 10.4 -9.5652%
JUTESPINN 148.4 152.9 133.6 134.6 -9.2992%
KEYACOSMET 7.6 7.3 6.8 6.9 -9.2105%
KTL 29.7 30.2 26.8 27.0 -9.0909%
MLDYEING 39.6 40.3 35.8 36.2 -8.5859%
IBP 36.9 37.0 33.5 33.8 -8.4011%
GQBALLPEN 82.5 84.5 75.0 76.1 -7.7576%
COMPANY YCP HIGH LOW CLOSE %CHG
AL-HAJTEX 88.4 105.3 88.4 101.3 -12.7345%
ALLTEX 12.6 14.4 12.6 14.4 -12.5%
GQBALLPEN 75.0 84.5 75.0 84.4 -11.1374%
CAPMIBBLMF 10.4 11.6 10.4 11.6 -10.3448%
JUTESPINN 133.6 152.9 133.6 149.0 -10.3356%
KTL 27.0 30.2 26.8 29.9 -9.699%
MLDYEING 36.2 40.3 35.8 39.7 -8.8161%
IBP 33.9 37.0 33.5 37.0 -8.3784%
PRIMELIFE 53.8 59.7 53.8 58.0 -7.2414%
ARAMIT 431.1 463.0 429.0 463.0 -6.8898%