Last week, thermal coal prices in Europe continued to strengthen above 170 USD/t. The main driver for coal prices remains gas, which continues to set records amid insufficient European gas storage capacity, lagging supply from Russia and a lack of LNG on the European market.
On 09.09.2021 October futures on the TTF hub in the Netherlands reached USD 690 per 1,000 m3 or EUR 56.35/MWh (+4.85 EUR/MWh to September 01, 2021). Currently, gas prices are about EUR 10-12/MWh higher than the ceiling at which gas-fired CHP plants can compete with coal-fired plants. An additional supportive factor was the decline in wind generation in Europe over the past week to 672 GWh (-80 GWh to September 01, 2021). Coal inventories at ARA terminals stood at 4.72 mio t. (+0.04 mio t. to September 01, 2021).
South African coal prices exceeded 154 USD/t in the last week. The main factor supporting prices is still problematic with material supply via the railway line, connecting the coal-producing provinces of South Africa and the port of Richards Bay. In addition, experts note the high trading activity of consumers from Asia-Pacific countries.
Last week, South African company Eskom reported that the volume of electricity generated for 2021 was 192 TWh (-7% to 206 TWh to 2020). 190 TWh per year was due to the long-term effects of the economic downturn in 2020. In 2021, Eskom, the largest consumer of coal in the country, purchased about 105 mio t of coal, which is 3% less than in 2020 (about 109 mio t) and 8% less than in 2019 (about 114 mio t). According to the company’s forecasts, in 2022 the volume of coal consumption will remain at the level of 2021. A decrease in demand on the part of Eskom for medium-calorie material in the future may contribute to the growth of its exports, provided that logistics problems can be solved.
Prices of 5500 kcal/kg NAR coal of domestic production in the port of Qinhuangdao rose above $170 USD/t. A limited supply of coal on the domestic market and the Chinese government’s decision to strengthen flood prevention measures at coal mines in Shanxi province until the end of October, supported prices for the Chinese material.
Australian thermal coal prices have in creased above 175 USD/t due to a ban on coal mining from 05.08.2021 to 10.09.2021 because of the COVID-19 outbreak.
On September 01, 2021, the Japanese government restarted operation of the first unit of the 1GW Shinchi coal-fired power plant. The power plant, located in Fukushima Prefecture, suffered structural damage in February 2021 earthquake and has since been decommissioned. The launch of the second Shinchi power unit is planned by the end of December 2021.
The quotes of Indonesian coal increased above 130 USD/t amid record heavy rains and floods in the Tanah Bumbu region of Indonesia. Due to the adverse weather, the Indonesian government was forced to declare a state of emergency for the period from 04.09.2021 to 17.09.2021. Also a few coal-mining companies declared force measure due to the extreme weather, which caused flooding in the mines.
Australia’s August coal mining ban and a reduction in coking coal in China’s domestic market forced Chinese steel producers to buy Australian coking coal from Asian traders, pushing Australian-origin metallurgical coal indices above $290.
Source: CAA Analytics
