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Wednesday, 12 February 20
CHANGES IN LNG MARKET COULD UNDERCUT PLANS FOR NEW JAPANESE COAL PLANTS - CLYDE RUSSELL
Reuters: Clyde Russell
The collapse in the spot price of liquefied natural gas (LNG) in Asia is a short-term phenomenon that may well end up having a longer-term impact, especially on thermal coal.
The spot price dropped to $2.95 per million British thermal units (mmBtu) for the week ended Feb. 7, the lowest price in records stretching back to 2010. It has lost 57% of its value since the pre-winter peak of $6.80 per mmBtu in mid-October, and is down 74% from the peak price in 2018 and 86% from the all-time high from February 2014.
While it’s unlikely that spot LNG prices will stay at the current depressed levels indefinitely, the trend toward structurally lower prices appears sustainable. There is still no shortage of LNG projects being built, with 17 million tonnes of capacity due to be commissioned this year alone, and considerably more likely in the next five years, as projects from Russia to East Africa start to come online.
This supply surge is likely to have two impacts on prices. Firstly, it will ensure that spot prices remain under downward pressure, and secondly, it will likely accelerate the shift away from long-term, oil-linked contracts to shorter-term, more flexibly priced deals.
This change in the way LNG is priced should give pause for considerable thought to any would-be developers of thermal coal power projects based on imported fuel in Asia, especially Japan. As a country that relies on imports for virtually all its energy, Japan has long prioritized security of supply and diversity in its energy mix. But perhaps the sands have shifted enough to lead to a re-think.
It would in all likelihood be possible to sign long-term or medium-term LNG supply pacts that are not linked to the price of crude oil, but rather to other instruments such as U.S. Henry Hub natural gas, or European gas prices, or even seaborne thermal coal costs. This could give Japan the security of supply it desires, but virtually eliminate the problem LNG has always had, its high cost relative to thermal coal.
Source: IEEFA | Reuters
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Saturday, 18 February 23
PAKISTAN PLANS TO QUADRUPLE DOMESTIC COAL-FIRED POWER, MOVE AWAY FROM GAS - REUTERS
Pakistan plans to quadruple its domestic coal-fired capacity to reduce power generation costs and will not build new gas-fired plants in the coming ...
Saturday, 18 February 23
2023 MARINE FUEL MARKET PREDICTIONS - JOHN BERGMAN, AURAMARINE
The drive for decarbonisation we witnessed in 2022 has continued into 2023, demonstrating the shipping’s industry positive strides in the fas ...
Saturday, 28 January 23
COAL GROWTH BLIP NOT TO BE REPEATED - BALTIC EXCHANGE
As 2022 drew to a close, global coal demand looked set to end the year just 1.2% up on the previous year. But that small increase was enough to pus ...
Thursday, 26 January 23
CHINA'S COAL OUTPUT INCREASES IN DECEMBER 2022 - XINHUA
China’s raw coal output posted stable expansion in December 2022, official data showed.
The country produced 400 million tonne ...
Thursday, 26 January 23
COKING COAL NARROWS THE GAP ON THERMAL AS CHINA REOPENS - REUTERS
The premium of high-grade thermal coal over coking coal in Asia is shrinking as China’s re-opening and ending of a ban on imports from Austra ...
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