Over the past week, European thermal coal indices rose to 116-117 USD/t. Prices remain supported by low stockpiles, expected cold weather and rising quotes for gas, following Iran’s strikes on Israel in response to the military invasion of Lebanon. Also, combined thermal coal shipments from Colombia (including deliveries to Europe) declined by 20% w-o-w.
Last week, the UK closed its last coal-fired power plant (2 GW), becoming the first G7 country to completely phase out coal-fired generation. However, this event will have a limited impact on the market, as the UK almost halted steam coal imports as recently as last year (the volume in 2023 did not exceed 50,000 t).
Gas quotations at the TTF hub strengthened to 442.97 USD/1,000 m3 (+11.21 USD/1,000 m3 w-o-w), despite an increase in EU underground storage reserves. Coal stocks at ARA terminals stayed flat at a relatively low level of 3.6 mio t.
South African High-CV 6,000 rose to 106-108 USD/t amid growth in the European market coupled with demand from the Asia Pacific, including Vietnam, which was hit by Typhoon Yagi. Meanwhile, market participants mention discounts in some deals for high-CV material, compared to exchange indices, resulting in speculation stating that the correlation between the exchange and physical markets has started to diminish.
In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao remained largely unchanged at 124 USD/t due to a slowdown in trading activity related to the Golden Week celebrations within October 1-7. Some market participants are optimistic, as they expect that prices will be supported after the weekend by cooling temperatures caused by the La Nina phenomenon, as well as announced measures to stimulate the country’s economy and maintenance of the Daqin railway line from October 6 to 26.
Indonesian indices moved in mixed directions last week: 5,900 GAR stood unchanged at 92 USD/t, while the price of low-CV 4200 GAR slipped to 51 USD/t (-1 USD/t w-o-w). The pressure was exerted by strong supply, driven by favorable weather conditions and weak demand from India, which reported high stockpiles at seaports.
In turn, the support was provided by stable demand for medium- and high-CV coal from the Philippines and Vietnam.
Australian High-CV 6,000 rose to the range of 140-142 USD/t, showing moderate growth on the back of stable demand in the Asia Pacific and announced stimulus measures for the Chinese economy.
The Australian government released a forecast for the country’s thermal coal exports in 2025, revising it downward from 208 mio t to 198 mio t because of La Nina. The authorities also expect coal export revenues to fall by nearly 22%.
Australian HCC metallurgical coal index extended strong gains above 200 USD/t amid stimulus measures in China. Additional support came from the recovery of the PMI index, which indicates higher manufacturing activity in China.
Some market participants are looking forward to the resumption of suspended steelmaking capacities in view of improved profitability of steel mills. Indian consumers are taking a wait-and-see attitude due to a sharp rise in quotations and even higher offer prices from coal suppliers.
Furthermore, a fatal accident occurred at the Oaky Creek metallurgical coal mine in the Australian state of Queensland on October 02, causing a shutdown of operations. The Oaky Creek mine is owned by Glencore and produced 4.17 mio t in 2023 (or 80,000 t per week).
Source: CCA Analytics
