World coal market: brief overview

Over the past week, European thermal coal market saw a price rally, with quotes soaring above 122 USD/t. Indices were supported by such factors as tight supply of Russian and Colombian material, high temperatures in Europe and a surge in gas prices.

Gas quotations at the TTF hub jumped almost 10% to 399 USD/1,000 m³ (+33 USD/1,000 m³ w-o-w), driven by escalating tensions between Israel and Iran. Coal stocks at ARA terminals increased from 2-year lows to 5.09 mio t (+0.14 mio t w-o-w).

South African High-CV 6,000 climbed above 116 USD/t on strong performance in the European market and higher demand from India. From July 23 to August 01, maintenance was underway on the Transnet rail network. Meanwhile, inventories at Richards Bay Coal Terminal (RBCT) rose to 3.56 mio t from 3.36 mio t.

In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao stayed flat at 120 USD/t during the week. The growth of quotations in the Chinese market was interrupted on the back of intensive coal sales by producers and traders due to the expected output hike in August.

Moreover, daily coal consumption in six coastal provinces spiked to a record 2.5 mio t per day, caused by rising temperatures. However, many market participants are maintaining a negative outlook towards prices for the next few months, despite new government stimulus measures, which can presumably support coal demand to a limited extent. The China Coal Consumers Association forecasts coal production to expand for the year, despite a decline in H1 2024.

State-owned coal companies addressed the China Development and Reform Commission (NDRC) to take measures for supporting prices in the domestic market due to rising imports, which are causing a drop in margins Chinese authorities are working on a mechanism to prevent coal prices from skyrocketing, while falling quotes and oversupply raise concerns among market participants.

Coal consumption in coastal regions was virtually unchanged despite the typhoon Gaemi. A surge in hydro generation led to the temporary shutdown of some coal-fired power plants. Coal stocks at the 9 largest ports totaled 25.02 mio t (-0.31 mio t w-o-w).

Indonesian 5,900 GAR amounted to 91 USD/t. Indonesia’s overall coal production in H1 2024 improved by 3% to 393.1 mio t (+12.62 mio t vs. H1 2024). Therefore, the target of 790 mio t in 2024 can be met and would represent an increase of 20 mio t, or 2%, to 2023.

Australian High-CV 6,000 firmed above 140 USD/t on strong demand from India, China. In addition, temperatures above 30°С in Japan are contributing to higher coal consumption stemming from increased air-conditioning demand.

Australian HCC metallurgical coal quotations kept declining below 217 USD/t on ample supply, high inventories and limited demand in the Asia-Pacific region. In China, steel prices were under growing pressure amid concerns over domestic oversupply and challenges in international trade. In addition, Japan is cutting metallurgical coal imports, confirmed by a drop in June volumes to 11.2 mio t (-19% m-o-m).

Japan’s Nippon Steel and Australian coal supplier Foxleigh have agreed the LV PCI coal benchmark of 193 USD/t for Q3 2024., up 12 USD/t from Q2 2024 benchmark as supply from Russia declines, following coal exports issues.

Source: CCA Analytics

World coal market: brief overview