The global coal market showed both downward and sideways dynamics: in Europe, prices stayed almost flat slightly above 92 USD/t; in South Africa, indices rebounded to 83 USD/t amid weak demand from India; in China, thermal coal quotations fell below 99 USD/t due to holidays and stronger hydro power generation. Australian 6,000 held above 104 USD/t, while HCC metallurgical coal remained unchanged at 190 USD/t.
European thermal coal indices stayed flat slightly above 92 USD/t, with persistently low demand and ample supply. Large volumes of South African material are being offered at a discount. German thermal power plants have sufficient coal stocks, which, combined with low coal-fired generation, reduces the need for replenishment. Wind and solar power generation remain substantial. Fluctuations in coal indices are largely driven by movements in the gas market and CO2 emission allowances. Coal stocks at ARA terminals saw a slight increase to 3.32 mio t (+0.05 mio t w-o-w).
South African High-CV 6,000 reached 83 USD/t, rebounding from the low of 81.99 USD/t recorded last Friday (the lowest level since February 2021). Activity in the South African thermal coal market remains muted. A constraining factor is the weak demand from India, stemming from high inventory levels, a depreciating rupee, as well as a prolonged monsoon season and soft iron ore prices. A cargo of 129 kt destined for Japan was reported. Additionally, about 300 kt is scheduled for delivery to Israel in November. On this route, South African suppliers have benefited from Colombia’s decision to halt supplies.
Indian consumers reduced business activity on series of public and religious holidays. Furthermore, prices for steel, cement, and sponge iron remain weak because of sufficient unsold tonnage, which is also weighing on demand for imported material. Several small sponge iron producers are considering plant closures, caused by losses.
Coal stocks at Indian thermal power plants totaled 45.7 mio t (-1.73 mio t w-o-w), which is 26% higher than the year-ago level (36.2 mio t). Stocks of domestically produced coal decreased by 4% w-o-w to 42.0 mio t, while stockpiles of imported coal dropped by 3% to 3.7 mio t. Coal-fired generation volumes declined on the back of a slowdown in industrial activity because of the holidays and a hike in renewable generation. In September, coal generation accounted for 75% of India’s total power production. Coal stocks at Indian ports rose by 2% w-o-w to 17.8 mio t (11.8 mio t of thermal coal and 6.0 mio t of metallurgical coal).
In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao lost 1 USD/t, declining to 9 USD/t ahead of the week of national holidays, celebrating the founding of the PRC (October 01). Mining companies were cutting prices, while traders refrained from deals, citing losses at low FOB price levels.
The slowdown in business activity led to a drop in coal consumption, which slashed by 31.8% in central China, 20.4% in southern China, and 13.9% in eastern China. An additional factor was Typhoon Ragasa, which resulted in a rise of hydropower output (discharge from the Three Gorges Dam grew by 17% w-o-w and was up by 283% y-o-y).
Market participants expect consumption to decline further during the holiday period as industrial enterprises suspend operations, while hydro power generation remains high.
Indonesian 5,900 GAR stood at 76.5 USD/t (+0.5 USD/t w-o-w), while the price of 4,200 GAR edged up slightly to 43.5 USD/t.
With the absence of Chinese and Indian buyers, activity in the Indonesian spot coal market was also subdued. Reports indicated that some major producers had sold out all their volumes for the remainder of the year.
Australian High-CV 6,000 stood at last week’s level, above 104 USD/t, amid a pause in the Chinese and Indian markets.
Japanese power utility Tohoku Electric and trader Vitol have signed a one-year contract, starting October 01, for the supply of Australian 6,000 kcal/kg material at a discount of 6 USD/t to the NEWC index.
This is the second year that Tohoku Electric has secured an October contract with a supplier other than Glencore, which previously played a leading role in contract negotiations with Japanese clients. Last year, Tohoku signed a deal with a major Hunter Valley thermal coal producer. The price was reportedly also set at a discount of 6 USD/t to the NEWC index.
The only trade for Australian 6,000 coal on the globalCoal platform last week was concluded at a discount of 4.7 USD/t to the NEWC index.
Australia’s HCC metallurgical coal index also held at last week’s level of 190 USD/t. Activity from China and India in the metallurgical coal market remained restrained, because of national holidays. Several speculative deals were recorded from traders in Northeast Asia.
Source: CCA Analysis
