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It was a volatile week in coal and European gas markets once more. However, SA coal prices ended up around $2 on the week, with ZAR prices further helped by a steadily weakening Rand.
European gas prices have skyrocketed recently, putting several UK energy suppliers into liquidation, as they fail to manage their price risk.
With most banks now having committed to ending funding for new coal mines by 2026, and a potential deal in the making for Eskom to accelerate its closures of coal-fired stations, the race between demand destruction and coal supply curtailment in South Africa looks like becoming a close-run thing. We will have to see if politicians and bankers, eager for headlines at COP-26, can strike a renewables funding deal with Eskom in time.
Meanwhile, there is a huge amount of talk around a Just Transition in Mpumalanga, with thousands of low-skilled coal jobs at risk. Surely, the only answer is for thousands of community growers and agri-processing to take over. In that regard, we will shortly be introducing various other energy and agri price indices.
In international markets, China is ramping up coal output once more from a 2 year low in July, as several mines are re-opened and new ones approved, to ensure supply and try to contain high prices.
Meanwhile, Coal India is only now considering raising domestic prices of Indian coal, as global markets peak.
In the US, both Appalachian and PRB coal have recently seen increased demand as several domestic utilities such as SWEPCO have relied more on coal again, amidst high gas prices and intermittent generation from renewables experiencing more frequent and intense weather events.