Met coal prices are lagging by a fair margin at the moment ( 250...

Met coal prices are lagging by a fair margin at the moment ( 250 to 300 usd) versus thermal prices which are back above 400 Usd in recent days for higher higher cal content such as Newcastle 6300 cal . I very bullish on Smr but I expect thermal to outperform on a price and hence margin for some time ( possibly years) yet.

The big difference is the met coal price is heavily driven by supply / demand pressures in big steel making countries like India and China . China remains in a self induced almost recession ( who knows what their gdp numbers really are as they just make them up ) thanks to a moronic zero covid policy . That should but soon start to improve as they open up. Lot of cheap Russian met coal is making its way to both those markets now as Russia can get it to both via Rail. Being frozen out of western markets isn’t stopping that coal from making its way into Asian markets .

The theme but like thermal coal has been under investment in new mines for many years now and an over estimation of how quickly green alternatives could become viable ( in met coals case hydrogen use in green steel ) so I expect met coal prices to remain elevated for the next decade relative to say the past decade .

Thermal coal but is a far more extraordinary story and has involved effectively self immolation by a major European power like Germany ( which is about 30% of the entire Eu economy) . They had plenty of nukes ( which can provide base load power) but Merkel choose to voluntarily turn them off and decommission them thinking they could rely on Russian Gas combined with wind and hydro .

Now that strategy has been shown to be the dumbest strategy going and Putin has them over a barrel completely ) hence they are turning on all their coal plants again and the greenies without the slightest recognition of their own hypocrisy are there cheering this on. But they don’t want coal mines restarted in Europe , this coal will have to be imported and boy is the world going to make them pay for it.

I can’t see this self inflicted wound resolving itself anytime soon especially with the Us pouring a ridiculous amount of weaponary into ukraine to keep the war going. The current Us administration has decided ( quite foolishly in my view) it’s in their long term geo political interests for Russia to bog itself down in ukraine for years .

The Europeans are also too proud and arrogant ( and this is partly why they have ended up in this mess in the first place) to back down also and reverse sanctions against Russia which would allow trade of Russian gas to renormalise . Putin has lowered deliveries through Nordstream 1 in a tit for tat but only because of the sanctions Russia is now facing from EU powers. Until renormalisation of gas flows happen thermal coal prices I feel are going to continue to hang around well above 300 Usd bucks per tonne and maybe higher as we are seeing at present .

So while the general theme of underinvestment in new coal assets , growing global demand mainly from Asia and an inability of green alternatives to supply reliable alternatives like people have forecast ( the hype hasn’t matched the reality ) is common to both coals , the specifics of each market and the demand side factors for each coal are greatly different . Hence in my view you really need to look at both ( met vs thermal) differently and not generalise too much on how they both could perform in coming years .