A depreciation typically pushes up the cost of imported goods, but this is not the mechanism at work in UK wholesale gas prices. While the UK is a net importer, especially in the winter, most of the gas arriving is linked to NBP prices and denominated in sterling.
Thermal coal and oil prices have been falling roughly in tandem since December 2014 even though their supply is affected by different dynamics and the commodities scarcely compete with each other. The common factor is US shale oil and gas production that has been a driver of oversupply in both markets, and weak currencies in coal exporting markets have indirectly strengthened the effect of oil prices on coal production costs.
A raft of institutional investors from the Church of England to the University of Oxford to the Norwegian government’s pension fund manager (NBIM) have trumpeted decisions to cut their exposure to thermal coal on environmental grounds.
The cynic might suspect the timing has as much to do with the outlook for coal market fundamentals as it does with “responsible” investing. Thermal coal has become less attractive to investors, because prices are lower and the demand outlook is uncertain.