World coal market: brief overview

Over the past week, thermal coal prices strengthened beyond 125 USD/t. The quotations were supported by an increase in coal consumption and a sharp rise in gas prices amid a strike by Australian workers of the LNG supplier.

TTF gas prices jumped 22% to 421 USD/1,000 m3 (+78 USD/1,000 m3 w-o-w) after the beginning of the strike of Chevron workers in Australia with possible total shutdown and amid limited supply of gas from Norway due to maintenance at several fields and repair works at several infrastructure facilities.

South African High-CV 6,000 index rose above 122 USD/t. Paper contracts also showed positive dynamics. Quotes of South African material rose on the back of strengthening of the energy market in the EU, increased demand in India and concerns about the reduction of supplies from South Africa.

In September, South African coal supplies through Richards Bay Coal Terminal (RBCT) are expected to fall to 4.0 mio t. (-0.17 mio t m-o-m), due to deteriorating rail safety and low stockpiles totaling 2.08 mio t (-1.50 mio t vs the same period in July 2023).

Railway operator Transnet has reduced shipments to RBCT over the past few weeks as vandalism on the North Corridor line has increased following the dismissal of a large number of employees as a result of a change in approach to rail infrastructure security and the hiring of private security organizations.

The North-East and Central Corridor lines have also experienced vandalism. However, Transnet predicts that the situation will stabilize in three months when the new system approach and technologies are finally implemented and contractors adapt.

In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao gained more than 1 USD/t to 123 USD/t. Quotes strengthened due to reduction of stocks in ports, tightening of safety inspections in mining regions, increased consumption by power plants and demand from other market participants seeking to replenish stocks ahead of China’s National Day and the Asian Games.

Inventories at the country’s 9 largest ports decreased to 20.91 mio t (-0.37 mio t w-o-w).

Quotes of Indonesian material rose to 88 USD/t. Prices are supported by demand from India and Pakistan, as well as supply concerns over a mine incident in East Kalimantan in late August. In addition, suppliers of high-CV coal are reluctant to cut prices, citing increased costs.

Australian High-CV 6,000 material firmed to 161 USD/t. The prices are supported by demand from Asia-Pacific countries and India, where stocks at power plants last week decreased by 7-10% due to higher consumption and shortage of railcars for coal transportation.

Additional stimulus for buyers is the initiated strike of employees of the LNG supplying company Chevron in Australia. In addition, increased demand is seen from South Korea, as the country’s authorities have barred state-owned power companies from buying Russian coal on the spot market.

Australian HCC metallurgical coal prices surged above 314 USD/t amid robust demand from consumers in Asia and India, where steel production is on the rise.

Limited supply of Australian material also provides support. In July, metallurgical coal shipments from Australia dropped by 21% to 11.87 mio t (-3.10 mio t m-o-m).

Source: CAA

World coal market: brief overview

Coal exports are profitable for all but coal companies