Australian thermal coal has suddenly joined the ranks of crazed commodities. In the past two weeks it has literally gone vertical to prices unseen since pre-GFC:
There are heats waves from Europe to China straining power grids triggering this price spike. It is also following the recent LNG price spike given the two energy sources move together. I do not expect either to last very long.
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And, longer-term, cop this:
- Japan has decided to halve its use of LNG, and cut coal by 40% by 2030.
- Replaced by renewables.
- This will cut Japanese usage of coal by 50-60mt, 5-6% of global seaborne trade. Some of it will probably be Australian volumes not to mention price falls.
- As for LNG, this will loose some 40mtpa of volumes onto global markets.
And both will be the thin end of the wedge for other countries to follow.
The jig is up for fossil fuels.