The CFD and FPVV indexes rose this month to bring the main index up to 14 c/kWh, an increase of 23% over last month's index value.

Last month majority of contracts were long-term, but this month only two contracts have a term of more than two years. Futures prices are the main benchmark for contract prices, and futures are higher in price closer to today, so shorter contracts tend to have higher prices than longer contracts 

The chart shows that the average futures price over three years has also risen over the last month, as futures prices continue their steady move upward, which helps to push the index higher.

Is there an end in sight for these contract price increases?

A large part of the latest increase in prices is the price for Huntly coal, which started rising last year due to covid-related issues, but then spiked further due to the war in Ukraine.

European countries import 57 million tonnes of Russian coal every year, but these imports are banned as of August of this year - only two months away!

As a result, Europe is desperately seeking alternative sources of coal, which could include the US, Colombia, South Africa, Australia, and Indonesia. Europe imports most of its coal from Russia, with a much smaller quantity coming from Colombia, so its options are limited. Colombia is the next closest coal exporter.

But the world's largest exporter of coal is Indonesia, and in many ways, it is the logical supplier to make up the difference. But 57 million tonnes will be a big step up for Indonesia in exports, and it may struggle to make up in a hurry.

So, without going into great detail, it looks likely that rebalancing the global coal trade will take at least a year or probably two, maybe three. In the meantime, most of the coal for Huntly comes from Indonesia, and the increase in demand is likely to keep its prices elevated for some time yet.