Last week, thermal coal indices on the European market went on falling below 125 USD/t under pressure from unfavorable fundamental factors, such as low demand, full EU gas storage facilities and lower electricity prices.
Gas quotations at the TTF hub strengthened to 521 USD/1,000 m3 (+17 USD/1,000 m3 w-o-w) on the back of active gas withdrawals from EU reservoirs, with storage remaining 99.5% full.
Coal stocks at ARA terminals amounted to 6.4 mio t (-0.03 mio t w-o-w).
South African High-CV 6,000 dropped below 110 USD/t on weak demand in Europe, with South African companies diverting supplies to India, boosting shipments to Indian sponge iron producers.
South Africa’s Tshiamo Group acquired Umlalazi mine from Thungela Resource, which had been producing thermal coal for more than a year. The operator of the mine will be Saldomate Proprietary Ltd. Tshiamo expects mining to restart in March 2024 with a capacity of 1.32 mtpa, of which 0.84 mio t will be exported through the port of Maputo, which is currently being negotiated with.
In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao gained 2 USD/t to 132 USD/t, resulting from falling temperatures and price increases by Senhua, with stockpiles continuing to grow.
China’s National Development and Reform Commission (NDRC) plans to keep the benchmark for long-term local coal supply contracts of 5,500 NAR in 2024 unchanged at 93 USD/t, so the premium over the international market indices may persist and encourage coal imports. NDRC is expected to announce the benchmark during the coal conference on December 5-8.
Coal stocks at Qinhuangdao port climbed to 6.5 mio t, while combined inventories at 9 major ports rose to 29.1 mio t (both up 0.3 mio t w-o-w), the highest level in the last 5 months.
Indonesian 5,900 GAR lost 2 USD/t to 93 USD/t, remaining under pressure, given weaker buying activity and the impending approval of a coal production quota increase.
Australian High-CV 6,000 strengthened to 125 USD/t after a prolonged fall, amid firming domestic prices in China.
After a sharp decline a week earlier, Australian HCC metallurgical coal indices continued to hold at the level of 310 USD/t, as supply remains stable, and buyers are not rushing to make deals in anticipation of possible further price cuts.
Glencore bought a 77% stake for 6.93 billion USD in Elk Valley Resources (EVR), which is owned by Canada’s Teck Resources and is involved in coking coal mining. Japan’s Nippon Steel is expected to increase its stake in EVR to 20% and South Korea’s POSCO to 3%. By the end of 2023, EVR is forecasted to produce 24-26 mio t.
Australia’s Foxleigh and Japan’s Nippon Steel agreed on a Low Vol PCI benchmark price for Q4 2023 at 240 USD/t FOB, while the benchmark for Q3 2023 was set at 183 USD/t FOB on October 13.