After 11 Straight Weeks of Misery, Coal Prices Begin to Rise

World benchmark coal prices have started to rise this week, after 11 consecutive weeks of languishing due to weak demand at the end of 2024 and projected demand in 2025 which tends to stagnate.

Based on data from Refinitiv this week, Newcastle coal prices for the February 2025 contract jumped 4.13% on a point-to-point (ptp) basis. On Friday trading (17/1/2025) this weekend, coal prices shot up 3.14% to US$ 119.75 per ton.

The International Energy Agency (IEA) predicts that in 2025, world coal consumption growth is expected to slope even only 0.34% yoy to 8,801 million tons.

World coal prices began to rise after the release of the latest inflation data for the United States (US) for the December 2024 period.

The final Consumer Price Index (CPI) report for 2024, which brings to a close the Biden administration and its fight against pandemic-induced price spikes, showed that price increases, except for food and energy, eased to 3.2% in December from 3.3% the previous month.

Although headline inflation increased slightly, the core measure called “core CPI” is considered a better indicator of underlying price pressures.

With the pace of inflation in the housing sector declining significantly, economists expect the upcoming report on the Personal Consumption Expenditure (PCE) Price Index for December 2024 to weaken, possibly even falling below the 2% target set by the Fed.

The PCE is used as a benchmark for inflation targets by central banks, and US central bank (Federal Reserve/The Fed) officials expect a significant slowdown in the first few months of this year.

Fed officials stated that the data released on Wednesday showed inflation in the US continues to ease, although they noted heightened uncertainty in the coming months as they await initial policies from President Trump's new administration.

When inflation subsides, it is hoped that interest rates will be able to fall again, thus stimulating the economy. So the need for coal for electricity needs is likely to increase. When demand rises, coal prices will be leveraged.

On the other hand, the rise of coal occurs even though demand projections in 2025 tend to stagnate. The International Energy Agency (IEA) predicts that in 2025, world coal consumption growth is expected to slope even only reaching 0.34% yoy to 8,801 million tons.

Coal demand from China is expected to tend to stagnate in 2025 with consumption of 4,940 million tons. This number only grew by 1 million tons or only 0.02% from 2024 consumption of 4,939 million tons.

Meanwhile, India, the world's second largest coal consumer, is expected to have a consumption of 1,363 million tons in 2025. This number also only grew by 48 million tons or 3.65% from 2024 of 1,315 million tons.

China and India's coal consumption tends to flatten out due to the development of green energy that is starting to take the coal market as an energy source.

In August 2024, China's hydropower resources increased by 10.7% in August compared to the same month in 2023, reaching 163.5 billion kWh, although the growth rate slowed from a 36.2% surge in July.

The contribution of renewable energy also continued to rise, with solar power production jumping 21.7% compared to the previous year, while wind power rose 6.6%. Nuclear power generation rose 4.9% in August.

The outlook for global coal in 2025 is expected to be more sluggish than last year amid accelerating demand. In fact, in 2023 and 2024, global coal demand or consumption reached an all-time high.

The World Bank estimates that global coal prices will slope in 2025 as demand from China is expected to moderate.

“Prices are projected to fall by about 12 percent in 2025 and 2026, after an estimated decline of more than 20 percent in 2024,” according to the World Bank (3/12/2024).

The average world coal price forecast by the World Bank is US$120 per ton in 2025.

Source : https://www.cnbcindonesia.com/research/20250119101452-128-604268/setelah-merana-11-pekan-beruntun-harga-batu-bara-mulai-bangkit