Russia is driving the global energy shock

There have been a lot of articles pointing to the Chinese ban on Australian coal imports as the cause of the global energy shock. This was partly the case earlier in 2021. But Australian coal has been going out roughly as normal more recently, just to other markets. The key driver is, in fact, choked Russian and “other” coal exports which includes Indonesian.

UBS with the note:

Lower seaborne coal shipments (-1% YTD) supporting record high prices

UBS Evidence Lab data (> Access Dataset) suggests coal shipments remain down ~1% YTD (as of 26-Sep). Higher shipments have emerged from US producers (+22% YTD), while Australian and Indonesian shipments are also up slightly (both +1% YTD). These gains, however, have been offset by Russia (-17% YTD), Canada (-8% YTD), and South Africa (-7% YTD). Shipments over the week (ending 26-Sep) were down 2% y/y, compared to +9% y/y in the previous week. In w/w terms, shipments were flat.

Thermal coal prices up ~160% YTD at ~US$210/t, up ~15% w/w

Newcastle 6,000 kcal/kg thermal coal prices have risen ~15% w/w to ~US$210/t. Prices are performing strongly y/y, up ~160% after weak demand in 2020 due to COVID-19 restrictions. Tight supply, low inventories and strong demand have supported the thermal coal price. Chinese thermal coal markets remain very tight, with coal shortages resulting in record high prices. Authorities are ordering industry to cut output to reduce coal demand so that inventories can build ahead of winter (news).

Obviously, supply is down everywhere on Delta. I don’t know why Russian coal exports have tumbled this year. It has also limited gas exports to Europe, partly on accidents.

Thus, Russia is culpable both east and west for sky-high energy prices and has also signed on to the OPEC+ agreement choking oil output.

Is it deliberate?