As Power Consumption Rises, Asian Coal Prices Hit Record High... "Potential to Fuel Inflation"

[Image source=Yonhap News]

[Asia Economy Reporter Kim Bo-kyung] As countries around the world face an emergency in securing fuel, coal prices in Asia have soared to record highs during the summer peak electricity season, Bloomberg reported on the 27th.

The spot price of coal at Australia's Newcastle port, compiled biweekly by market research firm IHS Markit, rose 3.4% on the 24th to $402.5 per ton. This is the first time the price, a key indicator of coal prices in the Asian region, has exceeded $400.

According to coal traders, coal shipments destined for Europe next month were sold on the 24th at a record high of $421 per ton. Additionally, last week, the price per ton of coal shipments heading to the Asian region also surpassed $400.

Meanwhile, South Korea and Japan are stockpiling fuel ahead of the summer peak electricity usage season, and Germany and Austria are restarting coal-fired power plants that had been shut down.

There are concerns that the rise in coal prices could ultimately lead to increased consumer burdens and fuel inflation.

In particular, Bloomberg reported that China is facing a test of whether it can stabilize the coal market ahead of the summer peak season.

Due to recent heat-driven cooling demand and the resumption of industrial activities following the easing of COVID-19 restrictions in Shanghai, electricity usage in many northern and central regions of China has reached record levels.

Fengkuang Coal Logistics, a supplier providing electricity to Jiangsu Province, an industrial hub on China's eastern coast, announced that electricity supply exceeded 100 million kW on the 17th.

According to the People's Daily, the Henan Provincial Power Company stated that ensuring power supply during the summer peak season in the region is a serious and complex issue, forecasting that this year's peak load will reach 75 million kW, a 7.9% increase compared to the same period last year.

A representative from the China Electricity Council, a socio-economic organization, said in a recent interview with China Central Television (CCTV) that while a large-scale power shortage like last year will not be repeated, supply during the peak season will not be easy.