The surge in the spot price of liquefied natural gas (LNG) has dragged seaborne thermal coal prices higher, but only for the higher quality grades that can substitute for natural gas in
The surge in the spot price of liquefied natural gas (LNG) has dragged seaborne thermal coal prices higher, but only for the higher quality grades that can substitute for natural gas in power generation.
The spot price of LNG in Asia more than doubled last week as the market digested the loss of nearly 20% of the global supply of the super-chilled fuel after the U.S. and Israeli strikes on Iran effectively closed the Strait of Hormuz, shutting off Qatar's LNG.
LNG for delivery to North Asia LNG-AS jumped 116% to a two-year high of $22.50 per million British thermal units (mmBtu) in the week ended March 6.
The surge in LNG prices has opened the window for gas-to-coal switching in Japan and South Korea, the two Asian countries with the biggest ability to arbitrage between the fuels used to generate electricity.
Japan and South Korea predominantly buy Australian thermal coal with an energy content of 6,000 kilocalories per kilogram (kcal/kg), and the index of this fuel at Newcastle Port, as assessed by commodity price reporting agency Argus, rose to $129.62 a metric ton in the week to March 6.
This was a 14-month high and up 11.6% from the
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