Over the past week, thermal coal quotations on the European market edged up within the range of 104-106 USD/t. However, on the paper market, Q3-2024 and Сal-25 contracts rose significantly to 118-121 USD/t and were well above spot prices, indicating expectations of increased demand or reduced supply in the future. Quotes were supported by such factors as higher gas prices, rising temperatures and low inventories, while pressure remained in view of increased RES generation and resumption of coal shipments from the US through the port of Baltimore.
Gas quotations at the TTF hub jumped to 388 USD/1,000 m3 (+58 USD/1,000 m3 w-o-w) on lower Norwegian supplies.
South African High-CV 6,000 firmed to 110-112 USD/t on the back of railcars derailment, low stockpiles, as well as steady demand from India, South Korea, Vietnam, and Pakistan. Richards Bay Coal Terminal (RBCT) stocks stayed flat at 2.1 mio t.
On May 18, 214 kilometers away from RBCT, railcars derailed on Transnet’s network, negatively affecting coal transportation. Following the incident, shipping of the material was performed via alternative routes, however, on May 22, the railway lines were reopened for the coal haulage to the terminal. Exporters hope that South African operator Transnet will manage to expand transportation capacity, enabling to raise stocks at RBCT up to 5 mio t ahead of planned maintenance of rail infrastructure in July.
In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao added 1.5 USD/t to 121.5 USD/t, driven by rising consumption and the restocking ahead of summer. The spot market was also supported by higher purchase prices from Shenhua and other producers, as well as forecasts for temperatures rising to 32-35 C° in the northern and central regions of China. Furthermore, a gas leakage accident at a mine in Hegang City last week killed 5 people, that could lead to stricter safety inspections at coal mining facilities and production cuts.
Inventories at the 6 largest coastal thermal power plants remained virtually unchanged at 14.3 mio t, while coal consumption rose from 746 kt/day to 754 kt/day. Stocks at the 9 largest ports totaled 25.6 mio t (+1.2 mio t w-o-w).
Indonesian 5,900 GAR climbed to 93.8 USD/t (+2 USD/t w-o-w), on tight supply of High-CV material due to heavy rainfall in Sumatra and South Kalimantan. However, Chinese consumer demand was low, given the increase in hydro generation in southern China and sufficient stockpiles. Meanwhile, buyers and suppliers are mostly making index-linked deals because of uncertainty about the direction of the market in the coming weeks.
Australian High-CV 6,000 dropped to the level of 140 USD/t amid higher volatility of the European energy market. Furthermore, interest from Japanese buyers, who are traditional consumers of Australian High-CV coal, waned on high inventories and the weakening of JPY against USD.
Australian HCC metallurgical coal quotations surged above 238 USD/t, owing to increased activity from the Asia-Pacific and strong demand in India. There was also a rise in prices for coal contracts with delivery in July, following the expectation of supply cuts. According to some market participants, current levels are very attractive to consumers and a drop in indices seems unlikely. Moreover, the Chinese authorities adopted a package of stimulus measures to support the real estate sector, so the steel market is expected to improve.
Source: CAA
