Asia, Europe heatwave pushes Australia coal prices to 6-year high
"Given the weakness of the yuan relative to the U.S.-dollar, this has reduced the purchasing power of consumers in China to a certain extent as well," he added.
Australian thermal coal prices have hit six-year highs as a heatwave across the Northern Hemisphere has triggered a spike in demand for coal-fired power to help keep air conditioners cranking out cool blasts.
"Extreme heat in Asia and Europe is pushing power demand for industrial and also residential cooling above what's normal for this time of the year," said one utility trader, declining to be named as he was not authorized to talk about commercial matters.
"Coal has reacted stronger than natural gas because more spare coal capacity has been activated," he said.
Weather analyst Ed Whalen said, "widespread warmth between 1-4 degrees Celsius above normal was observed across much of South Central, East, and Northeast China over the past seven days". Hot weather would this week "dominate most of China once again," he added.
In Japan, the unusual heatwave last week pushed temperatures in Tokyo above 41 degrees Celsius.
Beyond maximizing coal-burning, Japanese utilities have cranked up old oil-fired power stations to cope with the spike in power demand, which has also sent the country's wholesale electricity prices to record highs.
Extreme heat has also gripped large parts of Europe, with temperatures in Spain and Portugal exceeding 40 degrees Celsius and even Scandinavia seeing temperatures of more than 30 degrees.
European utilities, especially in Germany, have turned to coal-fired power stations to fill some of that gap, generation data in Thomson Reuters Eikon showed.
Overall, thermal coal prices have this year outperformed other fossil fuels like crude oil and liquefied natural gas, as the strong demand comes amid stagnant output while availability in oil and gas has been rising.
CAN IT LAST?
With the coal price boom virtually uninterrupted since April, some in the industry are asking how long the rally can continue.
"As we get into the shoulder season, we should see some of the summer demand wanes as cooler temperatures prevail and we move out of the peak summer demand season," said Pat Markey, Managing Director of commodity consultancy Sierra Vista Resources.
The yuan has fallen about 8 percent against the dollar since the start of the second quarter as concerns over an escalating trade dispute with the United States, the top buyer of Chinese products, has weighed on the Chinese currency and its stock markets.
(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)