Prices are surging from China to Europe as demand for coal rebounds from a virus-induced hit, and temporary mine outages curtail supply. Yet companies remain hesitant to invest in new projects with financing difficult to come by and question marks over long-term demand.
That’s a boon for miners’ bottom lines but goes against the grain of the typical commodity cycle, where high prices are a signal to increase production and eventually bring the market back into balance. The disruption to normal dynamics underscores how broader environmental goals are changing investment patterns for fossil fuels.
“We expect most coal miners exporting into the seaborne market will seek to absorb the current increase in coal prices to bolster balance sheets, rather than commit to new supply,” said Viktor Tanevski, a principal analyst at Wood Mackenzie Ltd. “There remains a void of projects that are under construction or construction-ready that can be fast-tracked to alleviate price pressure
We could be in for a quiet Asian session ahead of today’s ECB meeting and CPI report form the US, with a lack of market-moving news scheduled beforehand.
Asian Open: Oil Rises After OPEC+ Meeting, ISM Data Mixed
Matt Simpson June 1, 2021 11:03 PM Share:
Asian Futures:
Australia s ASX 200 futures are up 12 points (0.17%), the cash market is currently estimated to open at 7,154.60
Japan s Nikkei 225 futures are down 0 points (0%), the cash market is currently estimated to open at 28,814.34
Hong Kong s Hang Seng futures are down -53 points (-0.18%), the cash market is currently estimated to open at 29,415.00
UK and Europe:
Europe s Euro STOXX 50 index rose 32.29 points (0.8%) to close at 4,071.75
Germany s DAX index rose 146.23 points (0.95%) to close at 15,567.36
France s CAC 40 index rose 42.23 points (0.66%) to close at 6,489.40
Tuesday US Close:
The S&P 500 index fell -2.07 points (-0.05%) to close at 4,202.04