Natural gas and coal prices have risen since the start of the year, albeit with significant fluctuations in the first quarter. Prices have been boosted by rebounding global economic activity, bouts of very cold weather in northeast Asia and the U.S., and several supply disruptions. Prices are expected to average around one-third higher in 2021 than in 2020, before stabilizing in 2022. Demand for both commodities is anticipated to increase in 2021 in line with the economic recovery, particularly in Asia.
Natural gas prices spiked on strong demand and supply outages.The rebound was driven by the economic recovery, with a further surge triggered by bouts of very cold weather and supply disruptions. As these factors eased, natural gas prices fell back in March Japan and the U.S.
Natural Gas Prices
Japanese spot prices reached record highs.Demand for liquefied natural gas imports soared amid a sudden drop in temperatures, exacerbated by the temporary closure of several nuclear reactors which increased demand for natural gas-powered electricity.
Coal prices also saw a strong recovery, boosted by firming demand and supply disruptions., including a major sandstorm in China and flooding in Australia.
Coal-powered electricity capacity fell in the EU and U.S., but expanded elsewhere in 2020.due to increasing renewable capacity as well as coal-to-natural gas switching. However, these reductions were offset by increases elsewhere.