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Exploring the Impact of China’s Economic Rebound on Coal Prices

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An Ode to Coal

In the annals of history, the saga of coal unfolds like a mesmerizing tapestry – a smoldering odyssey of economic power and global influence. As nearbyΒ Rotterdam ICE coal futures danced at $122.70 per ton and theΒ ICE Newcastle ICE coal futures soared to $158.50 per ton back in August 2023, whispers of a bullish storm reverberated through the markets. A potent blend of geopolitics, a daring dance between Ukraine and Russia, set the stage for coal’s glory days. The flicker of hope ignited by China’s resurgence and Europe’s frosty winters painted a picture of optimism.Β Β 

The Price Rollercoaster

But alas, the winds of change swept through the coal markets post-August 2023. The Chinese economy, standing tall amid stable oil and gas prices, cast a shadow on coal’s ascent. Yet, all was not lost as coal prices found solace in a sideways trajectory in 2024. The specter of another price surge loomed large, fueled by the relentless Ukraine conflict. The fate of coal hung delicately on the threads of Chinese and Indian demand, swayed by the ebbs and flows of oil and gas prices.Β 

The Rotterdam Riddle

Following a dizzying rally to a record $465 per metric ton in March 2022, coal prices in Rotterdam nosedived to a low of $91.75 per ton in May 2023. The ensuing years unfolded a tale of a trading range, with Rotterdam coal futures meandering between $92.45 and $116.50 per ton in 2024. A technical tango at the May 2023 low and a directionless dance in price paved the way for uncertainty.Β 

Navigating Newcastle

Down under in Newcastle, Australia, coal for delivery remained entrenched in stillness in 2024. The charts paint a vivid picture – a plummet from $457.80 per metric ton in September 2022 to a modest $115 in February 2024. Despite the plunge, Newcastle coal futures found refuge in a narrow $115 to $137.50 range in 2024, perching delicately at $124.50 on March 22.Β 

China and India: The Game Changers

Behold, the behemoths of coal consumption – China and India – dictating the world’s energy narrative. With over a third of the global populace under their aegis, coal reigns supreme as the fuel of the masses. While the West pivots away from coal in a climate crusade, China and India continue to stoke the flames. The economic rhythms of these nations orchestrate coal’s destiny, as a revitalized China holds the key to a coal resurgence in Rotterdam and Newcastle.Β 

The Fossil Fuel Symphony

Coal, the sturdy pillar of the fossil fuel triad, waltzes alongside crude oil and natural gas in the hydrocarbon ballet. The recent somersault in U.S. natural gas prices – from towering heights in 2022 to subdued levels in 2024 – mirrors the rollercoaster ride of coal. As oil prices rebounded from their lows, offering a glimmer of hope, coal stood strong as a reliable alternative in China and India.Β 

Political Winds and the Coal Conundrum

On the other side of the globe, in the land of the free, coal finds itself on the election ballot. As the U.S. charts its energy course, coal emerges as a pivotal player. Climate change warriors clash with fossil fuel champions, setting the stage for a showdown in the November 2024 elections. The outcome could sway fossil fuel prices, while China and India’s economic fates intricately intertwine with the global coal markets. The future of coal, a contentious narrative in the eyes of climate activists, hangs in the balance.Β 

More Energy News from Barchart

On the date of publication, Andrew Hecht did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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