Beating Coal Prices, This Asset Soared 220% in Just One Week!

Jakarta, CNBC Indonesia – Coal prices have skyrocketed this year. The increase had broken the highest record since 2008 at US$ 280/ton on Tuesday (5/10/2021). It seems, there is no other commodity whose price has increased as sharply as the black stone.

After touching US$ 280/ton, coal prices ‘freefall’ as investors took profit.

On Wednesday (6/10), the price of coal in the ICE Newcastle (Australia) market fell 15.71% to US$ 236/ton compared to the previous day. Meanwhile, on Thursday (7/10), the price of coal fell 4.70% to US$ 224.90/ton.

Despite the slump in the last 2 days, in a week the price of coal still rose 3.64%, a month rose 26.10%. Then, since the end of 2020 (year-to-date/ytd) coal prices have skyrocketed by 175.11%.

The recent surge in coal was supported by dwindling supplies amid increasing demand due to the opening of economic activity. Rising oil and natural gas prices also affected the performance of coal, which recently recorded an all-time high price.

The increase in natural gas prices, indeed, is the main factor in the surge in coal prices. As natural gas becomes more expensive, the incentive to turn to alternative primary energy sources increases. One of them is coal.

In the past week, natural gas prices at Henry Hub (Oklahoma, United States) rose 5.67%. During the past month, the increase reached 26.07% and year-to-date it skyrocketed 126.8%.

In Europe, the cost of generating electricity with natural gas is EUR 89.4/MWh on 5 October 2021. With coal, the price is only EUR 58.06/MWh. This makes coal become the prima donna again, even in Europe, which upholds the issue of being environmentally friendly.

“Looking at the situation in Europe, natural gas can no longer compete with coal. As a result, the use of coal is increasing,” said the study by ELS Analysis, an energy consultancy based in Sweden, as quoted by Reuters.

Moreover, currently a number of countries in the world are being hit by energy ahead of this year’s winter.

Scarcity of supply and rising gas prices, rising tariffs and even power outages, and the difficulty of getting fuel oil (BBM) are some of the reasons.

Based on a compilation of reports from CNBC International, there are at least three countries in the world that are experiencing this, namely the UK, China and India. Some secure commodities, such as coal, for the continuity of their citizens’ electricity.

Then, what assets can beat the surge in coal prices this year?

NEXT: Which Asset Can Beat Coal?