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The boycott of Russian coal by the European Union and Japan made the price of black gold soar throughout this week. The benchmark coal price of Newcastle (Australia) closed at US$ 349.75/ton, up 9.26% compared to the previous week. This is an increase for the third week in a row. The beginning of the week opened with world coal prices moving flat at the level of US$ 319/ton. But it heats up on the second day of the week. On Tuesday (19/4/2022) world coal prices shot up 4.97% compared to the previous position. Then, it rose 2.86% and 3.54% in the next two trading days.

The reason for the soaring coal price is still the tight supply. After the European Union and Japan banned coal imports from Russia, the coal market became very tight as the imbalance between supply and demand widened.

Not to mention, more and more countries are shifting their energy sources to coal in line with the surge in gas prices. This step was taken by countries in the Balkan region such as North Macedonia. The reason is, even though the price has soared, the price of coal is still cheaper than gas.

Soaring coal prices have forced a number of countries to look for cheaper suppliers. Pakistan, which has been depending on coal supplies from South Africa, is now looking for cheaper suppliers because coal from South Africa is becoming more expensive.

Apart from logistical problems, South African coal prices have become expensive because of the social unrest that has been going on since last year. Referring to S&P Global, South African coal prices jumped 156.35% from US$ 107.45/ton in early January to US$ 275.45/ton on April 20.

S&P Global Commodity Insights reports that Pakistan is using Mozambique, Tajikistan and Indonesia as their alternative suppliers of coal. Coal imports from South Africa fell 32% (year on year/YoY) last year. Meanwhile, imports from Indonesia soared by 55%. "Many of the textile entrepreneurs are diverting their factory energy sources to coal," said one Pakistani entrepreneur, as quoted by S&P Global.

Apart from logistical problems, South African coal prices have become expensive because of the social unrest that has been going on since last year. Referring to S&P Global, South African coal prices jumped 156.35% from US$ 107.45/ton in early January to US$ 275.45/ton on April 20.

S&P Global Commodity Insights reports that Pakistan is using Mozambique, Tajikistan and Indonesia as their alternative suppliers of coal. Coal imports from South Africa fell 32% (year on year/YoY) last year. Meanwhile, imports from Indonesia soared by 55%. "Many of the textile entrepreneurs are diverting their factory energy sources to coal," said one Pakistani entrepreneur, as quoted by S&P Global.

Pakistan is even now threatened with an electricity crisis due to a lack of coal supply. Previously, Vietnam also faced a similar problem because of the high price of coal. If Pakistan is looking for alternative suppliers, a number of countries such as China and India have actually increased their coal imports from Russia to get cheaper supplies.

India's coal imports from Russia totaled 1.08 million tonnes in March 2022, more than double what was recorded in February. China imported 1.4 million tons of cooking coal from Russia in March, a drastic jump compared to that recorded in February 2022 (1.1 million tons) or March 2021 (550,000 tons).

China's coal production did increase 14.8% yoy in March to 395.79 million tons. They also target coal production of 12 million per day. However, China's low-quality coal is not suitable for steel smelting. The Bamboo Curtain country still relies heavily on imports for their metallurgical coal.

Indonesia is quite benefited from the high price of coal, because it can boost foreign exchange from the value of exports. Based on BP Statistical Review 2021 data, Indonesia is the owner of the seventh largest coal reserves in the world, reaching 34.87 billion tons, the status is until the end of 2020. Based on data from the Geological Agency of the Ministry of Energy and Mineral Resources (ESDM), the status as of July 2020, the number of Indonesia's coal resources reach 148.7 billion tons and reserves of 39.56 billion tons.