Will Japan’s quake leave a greater impact on the fuel market?
Will Japan’s quake leave a greater impact on the fuel market?
Following the earthquake on July 16 that hit Kashiwazaki city and lead to the shutdown of a nuclear power station owned by Asia's biggest power producer Tokyo Electric Power, a huge increase in the use of generators fired by coal and gas in order to compensate for the lost output from the nuclear plant is being witnessed.
Recently, the price of coal at Australia's power station Newcastle port, the world's largest coal export-harbor, rose to a record price following the chances of shutdown of Japan's biggest nuclear plant. Price of coal for immediate delivery at Newcastle in New South Wales increased 3.3 percent, from $2.29 to $72.37 a metric ton within a week, according to the global coal news index. That is above the previous record of $70.88, reached in June and the third consecutive weekly rise. This has surely spelt concern to Japan’s nuclear power stations.
Asian customers, including Japan and South Korea, are counting on supplies from Indonesia to fill the gap left by falling exports from China, which may result in the withdrawal of at least 25 million metric tons a year from the market. Australia, the second-largest exporter of thermal coal, is struggling to increase shipments because of port and rail bottlenecks.
The spot price of coal at Australia's Newcastle Port may even surpass last week's record as rain hindersoutput in Indonesia, Chinese exports drop and Japan's demand increases following the shutdown of a nuclear plant.
Coal is the world's fastest-growing energy source as high oil prices prompt a switch to cheaper fuels, the U.S. Energy Information Administration said. Coal's share of total world energy may climb to 28 percent in 2030, from 26 percent in 2004, the agency said in a report on May 22. Crude-oil futures reached a record $78.77 on Aug. 1 and have gained 17 percent this year. How will such a drastic supply and price shift impact the fuel market and its players in the longer run, if at all?
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