Natural gas supply interruption triggers coal "alternative demand", coal prices soar to $150, hitting a new high in over a year.

With the sudden escalation of military conflicts in the Middle East, the global energy supply chain is facing a serious challenge, and the price of thermal coal has soared to its highest level in over a year as a result. On Monday, the Asian benchmark Newcastle coal futures price jumped by about 9.3%, reaching the threshold of $150 per ton, setting a new high since November 2024; at the same time, the European market also reacted strongly, with the Rotterdam coal price rising by about 13% on March 2nd to $119.50 per ton, hitting a 52-week high. The main cause of this price volatility is the supply disruption of key natural gas infrastructure in the Middle East. Due to military actions in the region by Iran, Qatar, which accounts for about 20% of the global liquefied natural gas supply, was forced to shut down its largest Ras Laffan liquefied natural gas export facility for the first time in its 30-year operation. This situation has prompted buyers to actively seek alternative solutions, and if the shutdown continues for too long, they will consider increasing the electricity generation capacity of coal-fired power plants. The transportation through the Strait of Hormuz is actually blocked, exacerbating the already tense natural gas market, causing natural gas prices to double in the short term. This extreme price spike has forced global electricity sectors, especially countries in East Asia and the EU that heavily rely on imported energy, to quickly implement a "fuel switching" strategy, shifting electricity demand from expensive and scarce natural gas to coal, creating strong support on the demand side. While demand has surged, expectations of tightening supply on the supply side have also played a role in pushing up coal prices. Indonesia, the world's largest exporter of thermal coal, recently announced plans to cut its production targets for 2026, intensifying market concerns about long-term supply capabilities in the current turbulent situation. Analysts point out that this is the largest external shock that the global coal market has faced since the Russia-Ukraine conflict in 2022. Considering the current difficulty in filling the energy gap in the short term, the market sentiment remains bullish, and it is expected that the high volatility and high price trend will continue until the situation becomes clearer. It is worth mentioning that due to production cuts by oil-producing countries in the Gulf, crude oil prices have also soared to nearly $120 per barrel. Natural gas prices have also risen. European natural gas prices surged by 30% on Monday, while Asian spot prices have doubled in the past week and are still at high levels.