Do it yourself

The benchmark Newcastle thermal coal future prices have fallen to US$131/ton, the lowest price since June 2021. Though the current prices are down over 70% from the highs witnessed in September 2022; these are still materially higher from the pre covid 10yr average of close to US85/ton. The sharp spike witnessed in the past couple of years was initially due to logistic constraints due to Covid-19 and was further exacerbated by the geopolitical issues presented by Russian invasion of Ukraine in early 2022. NATO’s economic sanctions on Russia, the single largest supplier of energy to Europe, resulted in a rush to secure energy supplies from the alternative sources, catapulting the prices of coal and natural gas, most common fuels used for power generation, sky high. Now, since the supplies from other large coal producers, e.g, Indonesia, Australia and the US have improved materially, and European countries have built strong reserves, it is likely that the coal prices may remain stable ...

The global markets behaviour in the year 2022 would remain subject matter of analysis for many decades. Almost all markets – equity, bonds, commodities, crypto, housing, arts etc. - have shown a classical pattern in the current year, despite several unconventional factors impacting the global economy. If we observe from the averages the behaviour of commodity markets in particular has been very archetypal in a market still enduring a war, inclement weather and supply chain dislocations. S&P Goldman Sachs Commodities Index, has gained ~17% YTD 2022. Evidently, the first half of 2022 saw a sharp surge in commodity prices led by energy and food prices, ostensibly due to the Russia-Ukraine conflict and severe drought in many parts of the world. However, easing of post Covid logistic constraints and monetary tightening by most central bankers led to an improvement in supplies; demand destruction and unwinding of speculative positions; resulting in lower commodity prices.   However...

If we go by the popular media narrative, the country is facing acute power crisis. Many states are witnessing scheduled power cuts of 1 to 3 hours. The headlines screaming about worsening coal shortages are scaring the users, as the already hotter summer weather is entering its peak phase in May and June. Some industrial units in the states like UP, Haryana, Delhi, Punjab, Rajasthan, Tamil Nadu and Andhra Pradesh etc., are reportedly considering production cuts, in case power situation worsens further, considering the high cost of diesel based power backup. The government on its part has outrightly denied any power or coal crisis in the country. The concerned ministry and related officers have also assured availability of adequate coal stock. Not surprising, the power sector has been one of the most favorite sectors with investors in the past few months. The stock prices of the power sector companies, encompassing the companies in the business of power generation, power transmissio...

A recent study by the Canada based International Institute of Sustainable Development has highlighted some interesting trend in the energy subsidies in India. The report titled "Mapping India’s Energy Subsidies 2020" examines how the Government of India (GoI) has used subsidies to support different types of energy. As per the findings of the report, the following five key changes mark the shift in India's energy subsidies in recent years. 1.     Oil and gas subsidies up by over 65%. This rise—from INR 40,762 crore (USD 6.1 billion) in FY17 to INR 67,679 crore (USD 10.07 billion) in FY19— is largely driven by higher oil prices and growing use of subsidized liquefied petroleum gas (LPG). 2.     Renewable energy (RE) subsidies down by 35%. RE subsidies fell from a high of INR 15,313 crore (USD 2.3 billion) to only INR 9,930 (USD 1.5 billion) in FY 2019. This reflects falling RE costs but also a slowdown driven by policy decisions such as...