Prices for thermal coal rose by over 30% yesterday after Western countries imposed sanctions on Russian banks.
Thermal coal price rose 31.82% to $435 per ton yesterday.
Newcastle coal futures rose 27.8% to $400 per ton yesterday.
The sharp rise in coal prices will further exacerbate the global rise in energy prices, as many countries, especially in Europe and Asia, are still heavily dependent on coal-fired power generation.
In Germany, for example, the largest economy in Europe, coal-fired power is still the main source of energy. There are efforts to switch from coal to natural gas, but that may now change with the sanctions imposed on Russia by Western countries, because in the case of Germany, Russia is the main supplier of both coal and natural gas. Germany gets about 50% of its coal and 55% of its natural gas from Russia.
It also fits that China recently signed a coal deal with Russia. This should bring 100 million tons of coal from Russia to China in the next few years.
As coal prices rise, energy prices will inevitably continue to rise. This is just further oil for the already high inflation in the world. In the United States and Europe in particular, inflation has already reached historic levels in view of the ultra-loose monetary policy pursued by the central banks in both regions. In the end, as always, consumers will foot the bill.
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