World coal market: brief overview

Last week thermal coal indices on the European market rebounded above 95 USD/t after falling a week earlier. The growth was driven by a reduction in ARA stockpiles. Nevertheless, pressure on quotations remains due to significant gas reserves, as well as the end of the winter season with temperatures above normal.

Moreover, the authorities of Colombia, which also supplies coal to Europe, started considering a bill that would prohibit the exploration of new coal deposits and enable the state to nationalize coal assets. This has raised fears that mining companies may refuse further investment in production.

Gas quotations at the TTF hub declined to 267 USD/1,000 m³ (-9 USD/1,000 m³ w-o-w) on the back of high inventories, with Norwegian gas supplies dropping by 4.5% over the week following the shutdown of the Aasta Hansteen field and limited capacity at the Karsto field. Coal stocks at ARA terminals were down to 6.6 mio t (-0.4 mio t or -6% w-o-w).

South African High-CV 6,000 remained largely unchanged at 93-94 USD/t on weaker demand, particularly from Indian consumers as sponge iron and steel quotes dropped coupled with higher iron ore prices. European demand also remains limited. India’s imports of South African coal surged to 31.5 mio t in 2023. (+11.5 mio t or +57% vs. 2022).

In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao jumped by 3 USD/t to 132 USD/t as trading activity resumed after the end of the holidays. Quotes strengthened because of expected snowfalls, cooler temperatures (by 20°C in southern and southeastern provinces) and reduced inventories during the holidays.

Prices were also supported by Shanxi province’s decision to cut production at all facilities, with the central government expected to tighten safety inspections in the three main coal-mining regions ahead of the annual party meeting in March. Under the planned initiative, coal companies will be inspected for overproduction and the use of illegal labor.

Shenhua raised purchase prices for third-party suppliers by 3 USD/t for all coal grades on February 20, spurring positive expectations.

Indonesian 5,900 GAR weakened by 1 USD/t to 92 USD/t. Indonesian authorities said they had already agreed 542 mining permits out of more than 800 applications received. Meanwhile, heavy rains continue to affect loading operations in Sumatra.

Australian High-CV 6,000 is holding above 120 USD/t amid limited supply from Indonesia and vessel queues at Australian ports.

Australian HCC metallurgical coal quotations settled below 315 USD/t following subdued demand and ample supply on the spot market. Demand from India is partially met by alternative material from other countries.

Some market participants forecast temporary support for PCI coal owing to strengthening of Chinese prices on the back of deteriorating weather conditions and resumption of industrial activity. In addition, China’s Lu’an Mining Industry Group received a directive from the authorities to cut production in 2024. According to some estimates, the company will have to slash its annual output of coking coal by 3 mio t and PCI by 7 mio t.

Source: CAA

World coal market: brief overview