News & Analysis
News & Analysis

Coal Price Effect on Newcastle Coal Futures NCF1

21 September 2022 By Christian Ramos

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As a trader the penny should now have dropped regarding the importance of energy stocks. Geopolitical issues around the world, especially surrounding Ukraine and Russia, has pushed energy stock prices to all time heights. This is due to supply chains being affected by the ongoing conflict.

Newcastle Coal Futures, (NCF1) illustrate the increase in coal price pe the price of coal started skyrocketing, figure 1 shows the correlation between the price of the underlying commodity and the price of coal companies.

The price as of 20 September 2022 is $439.20, an increased of 155% since the 1st of January and it is at the same price it was at the height of the Russian invasion of Ukraine. It is possible that the price of coal could continue to increase with an increased demand then was expected. The main causes of high coal prices are a rapid diversification of European energy demand away from Russian gas and coal, with a resulting increase in demand for gas and coal from other suppliers.

Figure 1.

Ultimately when either investing in equites or trading equites or commodities it is important to have some understanding of the current state of regarding coal and energy stocks as they have been some of the biggest drivers in market.

Sources: Tradingview.com, https://www.australianresourcesandinvestment.com.au/, https://www.theice.com/

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