Coal Prices Skyrocket Due to Geopolitical Tensions


Geopolitical tensions in Eastern Europe caused coal prices to skyrocket. Recently, coal prices indicated an increase of 15.40 points to US$224.75 per metric ton.

The ICE Newcastle Exchange noted that thermal coal was traded at the level of US$236.25 per metric ton for the February contract on Tuesday (22/2/2022). This figure rose 2.40 points compared to the previous day of US $ 233.85 per metric ton.

A sharp increase occurred for contracts from March to June 2022. From trade data, coal contracts in March skyrocketed 7.36 percent or increased 15.40 points to US$224.75 per metric ton. In the previous trading, thermal coal was still being sold at the level of US$209.35 per metric ton.

Furthermore, for the April contract, the commodity was traded at the level of US$200.50 per metric ton or jumped 12.50 points from the previous day.

Then, the May and June contracts rose 11.85 and 13.20 points to US$185.45 per metric ton and US$176.45 per metric ton, respectively.

Although the price of coal continues to be above US$200 per metric ton, Tradingeconomics explained that the price has fallen drastically from this year’s highest level of US$245 per metric ton on February 11.

The instability in coal prices was dominantly caused by two countries in Eastern Europe, namely the tension between Russia and Ukraine. This is because the two countries are one of the largest gas producers in the world. What’s more, these two countries are the biggest suppliers to Continental Europe.

Statista noted that in 2020 Russia produced at least 638.5 million cubic meters of gas. The second-largest gas producer after the United States is 914.62 million cubic meters.

With tensions causing gas supply to be disrupted, countries in the world have shifted coal as an energy source. However, the high demand was not matched by an adequate supply of coal.

This is the background of coal prices soaring drastically.