Last week, thermal coal prices in Europe rose above 125 USD/t, supported by increased consumption along with a reduction in inventories. The share of coal-fired generation in Germany’s energy mix increased from 10% in November to 15% in early December, while the share of wind generation fell from 40% to 27%.
Gas quotes at the TTF hub fell to USD 437 USD/1,000 m3 (-14 USD/1,000 m3 w-o-w) on the back of stable supplies from Norway. Meanwhile, in early December, storage withdrawals grew almost 4-fold against the average November level due to cold weather in the EU.
Coal stocks at ARA terminals reduced to 6.4 mio t (-0.2 mio t or -3% w-o-w).
South African High-CV 6,000 dropped to 101-102 USD/t, while paper contracts strengthened. Despite logistical constraints, quotes remain under pressure, given rising freight rates and weaker demand for imported coal in India, driven by improving domestic supply.
Exports through Richards Bay Coal Terminal (RBCT) are expected to rise 14% in December to 4.1 mio t (+0.5 mio t vs. November). Thus, by the end of 2023, exports via RBCT may reach 47.8 mio t (-2.6 mio t vs. 2022), which is the minimum for the last 30 years and is caused by logistical constraints. Meanwhile, port inventories surged to a 13-month high of 4 mio t (+0.4 mio t w-o-w).
The situation with congestion involving coal trucks at other terminals of the port of Richards Bay is not yet improving, with suppliers facing high demurrage and complaining of profit losses. At the same time, South African operator Transnet has received only half of the requested funds from the government (2.5 billion USD instead of 5.3 billion USD), casting doubt on the new Transnet management’s ambitious plan to resolve port and rail infrastructure issues.
In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao maintained at 131 USD/t. Because of the coal conference in Hebei province, the market was not very active, nevertheless the forecasted cold weather and increased consumption kept quotations from downward correction.
The National Development and Reform Commission (NDRC), Coal Producers Association, and China Railway Corp are expected to agree on benchmarks and supply volumes for thermal coal after the conference, which runs through December 05-08.
Indonesian 5,900 GAR weakened by 1 USD/t to 92 USD/t, resulting from an increase in domestic supply and rising inventories in India and China.
Indonesian authorities are planning to update the law on mandatory domestic supplies starting from January 1, 2024. Under the new requirements, local coal companies will be charged a fee to compensate losses of those companies that prioritize shipments to local state consumers at prices below global indices. Thus, the authorities aim to level out conditions for coal companies.
Australian High-CV 6,000 jumped to nearly 150 USD/t on expectations of possible supply disruptions related to Cyclone Jasper approaching Australia.
Australian HCC metallurgical coal indices soared to 335 USD/t on tight supply and improving conditions on the steel market, including production growth in China. Moreover, market participants fear supply cuts, as the tropical cyclone is expected to hit the state of Queensland next week.
Source: CAA
