European coal futures for November 2021 delivery hit all time high levels with $275 per tonnes amid supply concerns as the winter nears.
API2 Rotterdam Coal Futures saw a rise of 400% in the last one year, up from $60 levels at October 2020.
However, the coal prices increased by around 70% only in the last month.
After a decline in global energy demand due to the lockdowns and restrictions against the spread of COVID-19 pandemic last year, the recovery of economies this year caused a shock of unexpected demand growth and supply shortage.
According to International Energy Agency (IEA), global energy demand declined by 3.8% in the first quarter of 2020, with most of the impact felt in March as confinement measures were enforced in Europe, North America and the rest of the world.
Global coal consumption fell by 4% in 2020, marking its steepest drop since World War 2. However, the decline was concentrated mostly in the early months of the year.
The IEA found that by the end of 2020, coal demand had surged above pre-COVID-19 levels, driven by Asia where economies were fast rebounding and as December was particularly cold.
Coal use in the fourth quarter of 2020 was 3.5% higher than in the same period in 2019, contributing to a resurgence in global CO2 emissions.
Despite the emission reductions efforts and carbon pricing on electricity generation from coal, the demand for coal also saw an increase in Europe.
These major trends continue during 2021 and it pushed the prices higher as demand grew faster and concerns for a cold winter only helped push prices up, which lead to record prices in the market.
By Nuran Erkul Kaya