Despite facing negative sentiment here and there, coal prices remain strong. Despite experiencing a 0.4% correction last week, coal prices are still at the highest levels in the past decade. The contract price for thermal coal at ICE Newcastle closed at US$123.5/ton last weekend. Before the correction, on Thursday (June 17, 2021), coal was at US$124.25/ton, the highest level since mid-2011.

Throughout 2021, coal prices have significantly surged. The price of this black gold has appreciated by 51% since the beginning of the year. Despite various negative sentiments battering it, such as energy policy reforms in various developed countries planning to move away from fossil fuels, and the tendency for monetary tightening by the US Federal Reserve in the coming years, which means slowing economic growth and impacting commodity demand, coal prices remain solid.

This is due to dynamics in the global market. The strengthening of coal prices is supported by improved demand prospects amid tight supply and changes in the market landscape due to geopolitical tensions. One hot topic is the relationship between China and Australia, which has yet to improve.

China imports a lot of coking coal used in steel production. However, its hot relationship with the Land Down Under has led the Panda Country to boycott metallurgical coal imports from India. China has also turned to other suppliers such as the United States (US) and Canada.

Despite having to pay more, this policy remains in place until now. China is not happy with Australia's pressure to thoroughly investigate the origins of Covid-19, which seems to corner China as the culprit behind the ongoing global pandemic.

Argus reports that US and Canadian coking coal exports to China increased in the first quarter of 2021. US exports to China increased more than fivefold to 2.11 million tons, while Canada increased by 51% to 2.3 million tons.

Although facing hurdles here and there, coal remains an affordable and cheap energy source. On the other hand, the coal market in the Asia-Pacific region remains strong, supported by increased demand from consumer countries such as China, Japan, and South Korea.