Over the past week, European thermal coal indices declined further to the support level of 110 USD/t. Pressure persists due to limited demand, falling gas prices and stable ARA inventories, resulting in downward correction of coal quotes over the last 3 weeks by 13% from the 12-month high.
Gas quotations at the TTF hub dropped to 484.51 USD/1,000 m3 (-28.40 USD/1,000 m3 w-o-w) after rising a week earlier, driven by the highest rate of gas withdrawals in December since 2022. However, gas supplies remain steady, also supported by limited LNG demand in the Asia-Pacific. Coal stocks at ARA terminals marginally increased to 3.9 mio t.
South African High-CV 6,000 fell below 106 USD/t on the back of downward trend in the European market and limited demand from India, where there is an increase in stockpiles of local material, given the seasonal reduction in generation and higher shipments. The border with Mozambique was closed again as truck transportation of South African coal to the port of Maputo was jeopardized by renewed protests in Mozambique.
South Africa’s Thungela Resources forecasts a 5% growth in export sales through 2024 to 12.5 mio t (+0.6 mio t vs. 2024) boosted by improved rail shipments to Richards Bay Coal Terminal (RBCT).
In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao eased 1 USD/t to 113 USD/t on limited demand in the spot market. Moreover, Shenhua, significantly lowered purchase prices for third-party suppliers in Inner Mongolia province and Huanghua port after reports of record monthly coal imports in November. Many mining companies have also reduced prices.
However, the country’s production is expected to remain high and continue to put pressure on the spot market, possibly exceeding forecasts. Furthermore, because of the negative expectations for the next few weeks, some traders are looking to sell off their stocks as soon as possible, despite the forecast of a 6-8°C drop in temperature next week.
The Energy Committee of China urged generating companies to significantly cut prices for lower quality coal. Producers can react by improving quality through preparation at washing plants to 5,500 kcal/kg.
Coal inventories at the 6 largest coastal thermal power plants decreased to 14.39 mio t (-0.10 mio t w-o-w), stockpiles at the 9 largest ports totaled 28.83 mio t (-1.29 mio t w-o-w).
Indonesian 5,900 GAR corrected below 94 USD/t, while 4,200 GAR lost 1 USD/t to 51 USD/t amid subdued demand on the spot market from the Asia-Pacific countries, where stocks remain at high levels. Meanwhile, heavy rains in South Kalimantan, which affected coal production and transshipment, failed to support prices.
Australian High-CV 6,000 plunged below 130 USD/t, continuing its downtrend. Chinese power plants stayed away from purchases in anticipation of further price falls, despite lower freight rates and stabilization of the yuan exchange rate. The demand in Japan also remains flat because of the shift towards gas and nuclear generation.
Australian HCC metallurgical coal index strengthened marginally to 204 USD/t, following tight supply in the spot market, particularly with January 2025 shipments, as well as a slight increase in demand from India and Southeast Asia.
In Chinese market, consumers held a wait-and-see attitude caused by uncertainty about domestic prices for Q1 2025 and the results of the Central Economic Working Conference, where the authorities will agree on the main directions of the Chinese economic policy for the coming year in a closed mode.
However, following the results of the Chinese Political Bureau meeting, the authorities announced the People’s Bank of China will continue to ease monetary policy, as well as to expand budget expenditures and efforts to stabilize the real estate market, including new measures to support domestic demand.
Source: CCA Analysis
