Over the past week, coal quotations on the European spot market declined below 104 USD/t amid lower gas prices and higher inventories. There was no demand for August deliveries. The bid/offer spread for September vessels was at 102-104 USD/t.
Coal stocks at ARA terminals exceeded 5 mio t and totaled 5.16 mio t (+0.20 mio t w-o-w). Gas quotations at the TTF hub (day-ahead contracts) was down to 370 USD/1, 000 m3 (-23 USD/1, 000 m3 w-o-w).
South African High-CV 6,000 traded within the range of 105-106 USD/t. Limited demand from Indian producers of hot briquetted iron put pressure on South African material.
In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao dropped by 1.85 USD/t to 118.37-119.78 USD/t. In China domestic market, coal prices trended lower in the mining regions and ports due to high stocks and poor industrial demand. Market players expect demand to remain weak for a couple of weeks (until the end of the rain season in eastern and southern China), after which the peak of summer consumption will reverse the oversupply situation and a moderate strengthening of prices can be expected.
Inventories at 6 largest coastal thermal power plants rose to 15.25 mio t (+0.22 mio t w-o-w), stocks at 9 largest ports totaled 26.68 mio t (-0.50 mio t w-o-w).
Demand for Indonesian coal from China and India remains limited. Indonesian High-CV 5,900 GAR fell to 92.30 USD/t (-0.85 USD/t w-o-w).
Market participants expect Vietnam’s steam coal imports to increase to 39 mio t by the end of the year (29 mio t in 2023). In H1 2024, the country imported 19.5 mio t (+22.6% y-o-y).
Vietnam’s growing economy (where many Chinese companies relocate their production facilities) boosted power demand. The country’s government expects power demand to rise by 10-12% annually until 2030. This will take place amid depletion of local oil and gas fields. In addition, Vietnam’s own coal stockpiles consist mainly of High-CV material, while new power plants are designed to consume Mid-CV coal, which has to be imported.
An additional driver of coal demand growth is the decline in power imports from neighboring Laos. Laos was until recently the main power exporter of hydro power to neighboring countries. However, the rise of cryptocurrency mining has led to a significant drop in export volumes.
Australian High-CV 6,000 continued trading sideways (131-134 USD/t). Price growth is hampered by weak demand from Asian countries (for example, Japan’s imports of steam coal dipped by 5% to 48.5 mio t during Jan-May 2024), relatively low LNG prices and sufficient supply of the material.
Australian Premium Low Vol HCC metallurgical coal quotations exceeded 255 USD/t. Anglo American was forced to shut down operations at Grosvenor mine after a fire on 29 June.
The mine, with an annual capacity of 5 mio t of metallurgical coal, is located in the Australian state of Queensland. According to the company, it may take several months to restore operations. Over the first six months of the year 2024, the mine produced 2.3 mio t, and it was planned to produce 1.2 mio t in H2 2024 due to the longwall relocation.
The shutdown of Grosvenor led to a sharp reversal in metallurgical coal prices. Taking advantage of the supply uncertainty, traders began to raise the price for August shipments of the premium Australian material.
Anglo American later assured customers that all delivery commitments for Q3 2024 would be fulfilled and the incident would have no impact on the supply of material in the market in the short term.
Australian producer Foxleigh, South Korea’s POSCO and Japan’s Nippon Steel agreed on a deferred benchmark for PCI coal (lagged PCI settlement) for Q2 2024. As well as the forward price set in April, it was set at 181 USD/t.
PCI coal prices continue to be supported by limited supply of material from Australia and Russia.
Source: CCA Analytics
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