Over the past week, European thermal coal indices strengthened above 122 USD/t. Quotes were supported by the growth in the gas market, resulting from the escalation of the conflict in the Middle East and uncertainty over Russian gas transit to the EU via Ukraine.
Despite high stocks in EU storage, gas quotations at TTF hub rose to 439.13 USD/1,000 m3 (+11.58 USD/1,000 m3 w-o-w) due to maintenance of Norwegian infrastructure and the threat of Russian gas transit interruption.
Furthermore, it is assumed that the available amount of gas may not be sufficient, for instance, in case of a sharp cold snap. Coal stocks at ARA terminals decreased to 4.7 mio t (-0.1 mio t w-o-w).
South African High-CV 6,000 ranged between 112-114 USD/t on the back of higher prices in Europe and lower inventories in India, where heavy rains negatively impacted rail loading of domestic coal.
Market participants say rail capacity in South Africa has improved owing to the gradual resolution of issues with locomotives that require repair and maintenance. Rail operator Transnet, in cooperation with companies and the NLCC (National Logistics Crisis Committee), is buying necessary spare parts from third-party manufacturers directly, as the crisis with China’s CRRC (China Railway Rolling Stock Corporation) remains unresolved. Moreover, the government may grant access to railroad infrastructure to private operators within 6 months.
In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao added 0.5 USD/t to 118.5 USD/t after a sustained decline. Indices were supported by a decrease in supply on the spot market and a 2.2% rise in consumption at the largest thermal power plants in comparison with the previous week.
An additional favorable factor is the temperature hike to 35C° in the central and southern regions and the expectation of a growth to 35-42C°. Some traders are staying on the sidelines, expecting further strengthening of 5,500 NAR material prices to 119.5 USD/t.
The vessel queue at major ports grew from 79 to 101 during the week, potentially indicating the improving demand. In addition, the China Coal Transportation and Distribution Association (CTDA) announced the country consumed 420 mio t of coal in July (+3.1% vs. July 2023), having ramped up volumes for the first time since February-June 2024.
Coal stocks at the 9 largest ports totaled 24.24 mio t (+0.15 mio t w-o-w).
Indonesian 5,900 GAR corrected to 92.2 USD/t (-0.30 USD/t w-o-w) on low demand in China and India, caused by high stockpiles.
Nevertheless, major companies are hoping for an upward revision of production quotas, while some Low-CV coal suppliers in Sumatra are waiting for the authorities to approve a downward revision of targets as they face difficulties in meeting their plans, as margins shrink because of the drop in market quotations and high production costs.
Australian High-CV 6,000 slipped below 147 USD/t because of the limited demand in importing countries. Moreover, export shipments from Australian terminals increased by 11% from 6.9 mio t to 7.7 mio t over the past week.
Australian HCC metallurgical coal index plunged below 200 USD/t. The drop in prices for Australian premium quality metallurgical material persisted amid ongoing unfavorable conditions in the steel market. Indian steel mills will be ready to resume buying once prices for their production recover.
Source: CCA Analytics
