Reuters reported that while coal prices rebounded from multi-year lows this week, the longer-term outlook remains weak. That’s largely because demand for the fuel is being tamped down by cheap oil and lower consumption in major markets.

As quoted in the market news:

In January, physical thermal coal prices fell below levels last seen during the 2008/9 global financial crisis, hit by a combination of factors, including tumbling oil prices and excess supply as a result of slowing economic growth and the rising use of alternative fuels for power generation.

However, a recent cold snap in Europe, northern Asia and North America has led to a spike coal demand and prices.

“There was a sudden cold snap pretty much everywhere, so a lot of utilities burned more coal than expected, and they are now ordering to restock in case there’s another spell of cold,” a coal trader said.

Coal cargoes for shipment from Australia’s Newcastle terminal last settled at $52.45/t, up almost 8% from January’s low of $48.60/t.

Prices for cargoes from South Africa’s Richards Bay jumped more than 13% during the time to $56.55/t.

European benchmarks remained the weakest, with cargoes for delivery into Amsterdam, Rotterdam or Antwerp (ARA) last closing at $45/t, near multi-year lows hit at the end of January.

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