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Coal prices hit a new record high as demand rises in India and China

Coal prices hit a new record high as demand rises in India and China
Coal prices hit a new record high as demand rises in India and China

The price of thermal coal, which is used in the generation of electricity, is reportedly approaching a new height as rising demand in India and China collides with an unwillingness to invest in new renewable capacity in a world that is heading towards decarbonization.

While coal is frequently referred to be the least-preferred commodity due to carbon emissions, India and China, two of the largest economies in Asia are still reliant on it, which means the growing costs might lead to higher power bills and adversely impact economic activity if they continue.

On September 10, the benchmark coal price was $177.50 a ton, more than doubling from the start of the year and up from under $50 a year ago. The price is the highest in the last 11 years, approaching the all-time peak of the mid-$180s back in July 2008.

Wood Mackenzie's principal analyst, Shirley Zhang, stated that what people are witnessing is a conundrum for investors, lenders, and businesses. Despite efforts to transition the whole region towards a cleaner future, coal would still be required for the next decade.

Many commodity prices have climbed this year, from aluminum to gasoline to copper, as demand has recovered from the early days of the COVID-19 pandemic and speculators poured in. However, even in this white-hot market, coal's 110% rise stands out.

Both India and China, which account for 65% of worldwide coal consumption, are the two largest importers of the fuel. The two countries are followed by South Korea and Japan, as the blistering heat of summer and economic recovery raised the demand for electric power.

China intends to phase out coal use starting from 2026 as part of its efforts to reduce greenhouse gas emissions, which means that consumption will peak in 2025 and then begin to decline.

On the other hand, India hopes to have about 60% of its installed energy production capacity coming from clean sources by 2030, mostly through the elevated use of renewables.

Source credit:https://asia.nikkei.com/Spotlight/Market-Spotlight/China-and-India-send-coal-prices-soaring-amid-green-energy-push

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Vinisha Joshi

Vinisha Joshi

Despite graduating with an engineering degree in electronics and communication, Vinisha Joshi chose the road less travelled, and decided to pursue her career in content writing . Currently, she pens down articles for cuereport.com and a few other distinguished news platforms, pertaining to business and finance.