The cold weather and improved coal consumption in Germany last week contributed to the strengthening of European market indices above 120 USD/t. Nevertheless, lower demand, full gas storage facilities, as well as falling gas and electricity prices remain the main factors limiting significant growth of quotations.
Gas prices at the TTF hub dropped to 451 USD/1,000 m3 (-55 USD/1,000 m3 w-o-w) on the back of full gas storage capacities in the EU and stable supplies from Norway.
South African High-CV 6,000 slipped below 105 USD/t. Paper contracts also declined in price. Despite logistical constraints, quotations plunged to 3-month lows on weak demand in Europe and a global downtrend.
South African coal exports may decline by about 18%, or by 1 mio t per month, as a result of Transnet’s restrictions imposed at Richards Bay terminals (DBT and MPT) last week and prohibiting new bulk carrier nominations to combat congestion caused by the accumulation of coal trucks. However, the head of Transnet noted, that the situation with traffic jams will stabilize in a few weeks and the ban will be in place until further notice. The congestion is also caused by poor rail infrastructure and the outage of several belt conveyors resulting from a fire in 2021. One of the conveyors will be repaired in December and the remaining 2 will be put back into service in mid-2024, thus removing about 400 trucks from coal traffic on the stockpile-to-terminal route.
South Africa’s Exxaro expects its thermal coal exports to fall to a 10-year low of 5.13 mio t in 2023 (-2% vs. 2022) due to limited transportation capacity and reduced demand in Europe and Asia. The company’s export shipments have been decreasing for the last 3 years from 12.2 mio t in 2020.
In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao stayed flat at 131 USD/t. Quotes were backed by cold weather and higher coal consumption by power plants amid low activity in the market. Besides, an incident in Heilongjiang province, that claimed 11 lives, in addition to 4 accidents in Shanxi province since mid-November, drew the attention of authorities on November 28. In response, the authorities sent a special commission to the region and initiated inspections that will last until the end of May 2024 and may lead to production cuts.
Indonesian 5,900 GAR added 1 USD/t to 93 USD/t. Indonesian prices were supported by strong demand from India and China. Some Indonesian producers received government approval to boost production quotas, with some producers diverting shipments to local consumers to meet growing demand and domestic supply commitments.
Australian High-CV 6,000 coal surged to nearly 130 USD/t as a result of possible mining restrictions in China, following a number of accidents. Moreover, the operation of Newcastle port was blocked by eco-activists for 30 hours at the beginning of the week.
Australian HCC metallurgical coal indices climbed to 325 USD/t in response to tight supply and firm demand, stemming from restocking in China, as well as a planned increase in coke prices by Chinese mills.
An accident in Liuiliang County, one of the key metallurgical coal mining districts in Shanxi province, led to the shutdown of 25% of mining capacity (more than 25 mines) or 37.5 mio t out of 150 mio t.