BofA Sees Coal Prices Topping $350 as Gas Crunch Shifts Demand
Bank of America says higher gas costs and tight supply may keep thermal coal expensive through winter, with Newcastle prices potentially above $350 a ton.
Key takeaways
- BofA says Newcastle thermal coal could exceed $350 a ton and remain cheaper than gas.
- Asian and European gas benchmarks were above $30 per MMBtu and €90 per megawatt-hour, respectively.
- Coal supply disruptions in Indonesia and Russia are limiting export capacity.
Bank of America says thermal coal prices may stay high through winter as rising gas costs push power producers toward coal and global supply struggles to keep up. The bank said Newcastle coal could exceed $350 a ton while retaining a cost advantage over gas.
The report said Asia’s JKM gas benchmark was above $30 per MMBtu and Europe’s TTF was above €90 per megawatt-hour. South Korea was among the sources of stronger demand, alongside Vietnam and Pakistan, which have increased coal imports amid high energy costs.
China’s tighter mine-safety and overproduction controls are restricting domestic supplies for power plants preparing for winter, according to BofA. In India, thermal power plant stocks have fallen more than 60% from their March peak after production came in below expectations. The bank said restocking in both countries may lift import demand further.
Exports from Indonesia have been affected by official production quotas and drought-disrupted river transport. Russian shipments remain limited by financial sanctions and security risks at Azov-Black Sea ports, while added cargoes from Australia, the United States, South Africa and Colombia have only partly filled the gap.
BofA said the world has little spare export capacity, leaving the coal market vulnerable to another supply shock.
This article was produced with the help of AI technology. Based on reporting by the outlets listed above.
