World coal market: brief overview

European thermal coal indices slipped below 98 USD/t. During the week, the quotes hit a 12-month low amid the start of negotiations on the settlement of the conflict between Russia and Ukraine, possibly resulting in the lifting of sanctions against the Russian economy, including energy exporters. Such factors as falling gas contracts also put pressure on the prices.

Gas quotations at the TTF hub dropped to 504.63 USD/1,000 m³ (-69.28 USD/1,000 m³ w-o-w) after the meeting of US and Russian representatives in Saudi Arabia. Coal stocks at ARA terminals decreased to 3.57 mio t (-0.46 mio t or -11% w-o-w).

South African High-CV 6,000 continued to slide below 94 USD/t, hitting an 11-month low, driven by ample supply and limited demand in end-users’ countries, including India, where domestic supplies are strong and the local currency weakened against the US dollar. Coal shipments to Europe (ARA terminals) totaled 330 kt last week, exceeding shipments to India (300 kt), where some customers expect a further decline in prices for 6,000 kcal/kg coal from South Africa to 90 USD/t FOB.

Additional pressure on prices in South Africa was exerted by an increase in stocks at Richards Bay Coal Terminal (RBCT) by 0.4 mio t to 3.58 mio t, caused by 18% rise in weekly rail shipments of coal to the terminal.
In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao moved down to 103 USD/t. Given the continued build-up of stocks at the ports, suppliers lowered prices, increasing the discount compared to last week.

Inventories at the 9 largest ports totaled 29.21 mio t (+1.53 mio t w-o-w).

Several power producers had disputes with Jinneng, which is one of the largest coal suppliers in China. According to some reports, as a result of the dispute, consumers including South China, China Huaneng, China Energy and Guangdong Energy refused to accept material under long-term contracts in favor of imports since February 10, as the contract price of Low-CV material and 5,500 kcal/kg coal was 30 RMB/t (4.18 USD/t) higher than the spot price.

Indonesian 5,900 GAR declined to 86 USD/t, the price of 4,200 GAR climbed to 48.5 USD/t. Quotes were moving in mixed directions, as Chinese generating companies showed higher interest for Low-CV coal on the back of relatively low demand for Medium- and High-CV material.

Starting March 01, 2025, Indonesian authorities will withhold all revenue from coal exporters for 12 months under new regulations, which could lead to a reduction in mining output in the country. Some market participants believe the initiative will also have a negative impact on access to financing in the coal production sector.

Australian High-CV 6,000 strengthened to 103 USD/t after a sustained fall. However, overall fundamentals remain negative.

Japan’s Tohoku Electric halved the load at its Noshiro #2 and #3 power plants in Akita Prefecture until February 28 due to fire and adverse weather conditions.

Australian HCC metallurgical coal index corrected below 190 USD/t because of ample supply. Meanwhile, unfavorable weather conditions at the port of Abbot Point continued longer than expected, and there is an improvement in demand from consumers in Southeast Asia and India. Furthermore, metallurgical coal shipments from the US are slowing as some regions were flooded on February 15-16. However, these factors did not provide significant support to the market.

Source: CCA Analysis

World coal market: brief overview

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