Newcastle coal futures, the benchmark for top consuming region Asia, moved to levels not seen in almost a month around the $320-per-tonne mark, supported by continued robust demand against a tightening market backdrop. Russia’s invasion of Ukraine and the unprecedented economic sanctions have thrown the global energy market into chaos, with top consumers scrambling to find alternative supplies to replace Russian coal.
Markets were already tight even before the Russian invasion of Ukraine as the energy crisis and soaring natural gas prices in Europe and Asia in late 2021 boosted coal use for power generation. Still, soaring domestic production from top consumer China poses a downside risk to prices.
Chinese coal output surged 15% from a year earlier to 396 million tons in March, while daily production hit a record after Beijing pressured state-owned producers to increase activity to ensure energy security.
