World coal market: brief overview

Last week, thermal coal indices on the European market fell below 130 USD/t amid a lower energy market as concerns over the conflict in the Middle East eased and the focus shifted to fundamentals, including full gas storage in the EU, weaker power prices and above-normal temperatures.

TTF hub gas quotes rose to 531.2 USD/1,000 m³ (-22.6 USD/1,000 m³ w-o-w), driven by lower LNG supply risks as well as an increase in EU gas storage inventories to 99%.

Coal stocks at ARA terminals decreased to 6.6 mio t (-0.3 mio t w-o-w) as water levels in the Rhine River raised to 200 cm vs. 82 cm a week earlier.

South African High-CV 6,000 corrected below 122 USD/t level due to a general decline in EU energy market prices and limited demand from India.

Rail operator Transnet plans to boost coal transportation for export from 50 mio t this year to 70 mio t, or +40%, in the 2024/2025 fiscal year, following an initiative unveiled by the company’s new management. The project will require investment from the South African government, however, Transnet has already reached out to coal companies in search of 70 mio USD to resolve the issue, involving imports of Chinese locomotives and locomotive spare parts. Therefore, the coal companies will have to provide the funds in proportion to their stakes in Richards Bay Coal Terminal, with the assumption that they will be able to recover the investment in the long term from rail tariff revenues.

In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao plunged 6 USD/t to 135 USD/t, resulting from higher production and reduced demand. Shenhua Energy cut prices again, but despite the lower quotations, many mining companies reported an increase in stockpiles. Total inventories at power plants in 25 provinces of the country set a new record, reaching 126.3 mio t against 125.8 mio t at the end of June.

The market was also pressured by the customs authorities’ announcement that China will continue to actively import fuel, including coal, gas and oil. Thus, the assumption about renewal of import quotas was denied.

Stocks at Qinhuangdao port climbed from 5.6 mio t to 6.0 mio t, while coal inventories at 9 major ports grew to 27.0 mio t (+0.7 mio t w-o-w).

Indonesian 5,900 GAR amounted to 98 USD/t (-1 USD/t w-o-w), remaining under pressure, caused by low buying activity from Chinese and Indian consumers. In addition, market participants said the glitch in the government’s sales verification platform was fixed.

Australian High-CV 6,000 tumbled below 125 USD/t on limited demand from India as well as Northeast Asian countries, where a warmer-than-normal winter is expected.

Glencore reported an improvement in thermal coal exports in January-September 2023 to 41.0 mio t (+1.3 mio t or +3% y-o-y).

Australian HCC metallurgical coal prices moved up to 350 USD/t on the back of steady demand from India and tight supply. Glencore’s metallurgical coal production in Australia totaled 5.2 mio t (-1.0 mio t or -16% y-o-y) in January-September 2023.

Source: CAA

World coal market: brief overview