Coal Prices Surge Again Amid Global Heatwave and Chinese Steel Demand

Jakarta, CNBC Indonesia - Coal prices strengthened again on Tuesday, closing at US$129.45 per ton, a gain of 1.57%, extending a two-day rally to 2.7%.

The increase was underpinned by rising electricity demand due to heatwaves sweeping the United States and Europe. In Europe, hot weather boosted power consumption, while low water levels on the Rhine River hampered coal distribution, raising supply concerns.

In the United States, the government extended the operation of the Craig Station Unit 1 coal-fired power plant in Colorado until 26 September 2026 to maintain reliable electricity supply during the peak summer season. This move reinforces the Trump administration’s policy of delaying the retirement of coal-fired power plants to anticipate surges in electricity demand.

Positive sentiment also came from China, where the metallurgical coke market remains in an upward trend. The price increase was triggered by tight coking coal supply. Production disruptions following safety inspections after a mining accident in Shanxi have prevented supply from fully recovering, keeping production costs high.

On the other hand, steel mill profit margins are under pressure. Steel prices have not risen as quickly as raw material costs, causing steel producers’ profits to continue shrinking. This situation is leading steel mills to consider whether they can absorb further increases in coke prices. Although hot metal production in China remains at high levels, keeping coke demand strong, the approaching low season in July and August is expected to weaken steel demand from the construction sector, with some steel mills beginning to schedule maintenance, potentially reducing coke consumption.