Trafigura Sees Rising Thermal Coal Prices and 3-5% Supply Shortage in 2022

High-voltage power line pylons are seen at sunset next to the GRES-1 coal-fired thermal power plant outside the city of Ekibastuz, Kazakhstan November 7, 2021. REUTERS/Pavel Mikheyev

NEW DELHI, March 8 (Reuters) – Global commodity trading firm Trafigura expects thermal coal prices to remain high in the near term due to an estimated 3-5% supply shortage in 2022, a senior executive said Tuesday.

Prices for thermal coal, typically used to generate electricity, rose to record highs due to increased purchases by Europe as sanctions on Russia cut off most of its gas supplies.

“On a fundamental basis, it seems to be very strong for coal. The supply constraints are real,” said Siddharth Choudhary, thermal coal manager for Trafigura in the Middle East, North Africa and Indian Ocean region.

“While demand has increased post-COVID, supply has not been able to meet demand,” Choudhary told the Engage 2.0 industry conference, adding that Trafigura predicted a coal shortage. thermal from 30 to 50 million tonnes in 2022.

Rising coal prices are bad news as the world battles inflation with crude prices near record highs due in part to US sanctions on Russian oil. Electricity prices in Europe have soared in recent days due to fuel shortages.

“Russia, with the current sanctions, looks set to move 80-90 million tonnes of coal on an annualized basis, a gap that South Africa, Indonesia or Australia cannot fill,” Choudhary said. , adding that Europe’s coal consumption in 2022 is expected to approach 2018 levels.

China may import more coal over the next two to three weeks due to rising local prices, but imports are expected to stagnate by the end of the year, he said.

India’s imports could drop by a quarter, but that would depend on increased production from state-owned Coal India (COAL.NS), Choudhary said.

Choudhary said there was no alternative as prices for all fuels are high.

“Everything related to energy is in deficit. So there is no alternative. With the current crisis for Europe, coal seems to be the best option,” Choudhary said.

Reporting by Sudarshan Varadhan Editing by Chris Reese

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