Over the past week, European thermal coal indices strengthened above 110 USD/t on the growth of gas quotes. The volatility in coal prices increased, following fluctuations in the gas and oil markets amid new sanctions against Russia’s energy sector.
Meanwhile, in Germany, the share of RES in the energy mix reached 81% vs. 63% a week earlier. Nevertheless, a slight rise in coal consumption is forecasted in Germany in Q1 2025 due to the high cost of gas.
Gas quotations at TTF hub firmed to 499.37 USD/1,000 m3 (+19.95 USD/1,000 m3 w-o-w). Gas reserves in the EU underground gas storage (UGS) dropped to 64%. Russian pipeline gas supplies to Europe continue to be delivered via Turkish Stream, while transit through Ukraine has been shut down since the beginning of the year.
By some estimates, the reserves in UGS are left for 70 days, resulting from high withdrawal rates. Coal stocks at ARA terminals slightly decreased to 4.31 mio t (-0.05 mio t w-o-w).
South African High-CV 6,000 slipped to the level of 95-97 USD/t, falling below the 100 USD/t mark for the first time in 10 months on stable supply. The price for Medium-CV material also weakened as demand in India remains limited, given high inventories and falling sponge iron quotes.
South African coal exports through the Richards Bay Coal Terminal (RBCT) reached a two-year high of 6.81 mio t at the end of November 2024 (+15% to November 2023), driven by improved rail transportation on the Transnet railway network.
In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao maintained at last week’s level of 107 USD/t because of reduced demand ahead of the Chinese New Year, as many end-users have already met their stockpile targets.
Moreover, industrial output is slowing down and state-owned coal companies will have only a brief break in production during the holidays. There is also warming weather forecasted in China, another factor that will contribute to reduced coal consumption and keeping stockpiles at high levels.
Coal inventories at the 6 largest coastal thermal power plants climbed to 13.76 mio t (+0.12 mio t w-o-w), stocks at the 9 largest ports totaled 25.32 mio t (-0.18 mio t w-o-w).
Indonesian 5,900 GAR corrected to 90 USD/t, while 4,200 GAR went down below 49 USD/t on the back of insufficient demand in the spot market for Q1 2025, raising concerns for Indonesian exporters, given their plans to boost production. Meanwhile, ongoing heavy rains in Sumatra and Kalimantan continue to weigh on shipments. Nevertheless, suppliers see more interest in Low-CV material from some consumers in India and Southeast Asia.
Australian High-CV 6,000 plunged to 110 USD/t. The downward trend in quotations of Australian material persists, caused by weak demand and high competition from other exporting countries, resulting in spot prices for High-CV coal reaching the minimum for the last 3.5 years.
Australian HCC metallurgical coal index continued to decline, having sunk to 192 USD/t, following low activity in the market. Pressure is also exerted by uncertainty over the possible introduction of protectionist measures by India, such as quotas on coke imports to protect domestic producers.
In China, domestic prices for coking coal and coke are expected to drop further because of adverse fundamentals in the steel industry.
Market participants point out that many large PCI buyers in the southeastern part of China are adequately stocked, therefore some Russian suppliers consider redirecting their spot supplies to India.
Source: CCA Analysis
