Over the past week, European thermal coal indices slightly strengthened above 113 USD/t. Prices were supported by a decrease in stockpiles and higher volatility of oil and gas quotes, driven by the escalation of the geopolitical tensions in the Middle East.
Gas quotations at TTF hub dropped to 408.43 USD/1,000 m3 (-2.25 USD/1,000 m3 w-o-w). Coal stocks at ARA terminals fell to 3.83 mio t (-0.32 mio t or -7% w-o-w).
South African High-CV 6,000 moved below 104 USD/t. Quotes remain under pressure, as falling supply (caused by coal export issues) is offset by low demand from consumers in India and Southeast Asia. Market participants expect prices for high-CV material to test the key support level of 100 USD/t during a week, with industry representatives believing this price to be the floor, given the high cost of production in South Africa as well as logistics expenses.
South African company Seriti Resources plans to cut more than 1,000 employees at Middelburg Mine Services and Klipspruit South-East mines, as coal supplies to domestic and foreign markets have become unprofitable. Seriti Resources is currently consulting with the government on the next steps in response to the current situation.
In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao added 1 USD/t to 121 USD/t. However, trading activity was reduced, as September 15-17 were non-working days in China due to the Mid-Autumn Festival. Prices were supported by lower production caused by rains, increased safety inspections at mines, higher demand from consumers ahead of the national holidays on October 1-7, as well as maintenance of several railroad tracks used for coal transportation in Shanxi province.
Some market participants expect FOB prices to rise further in the medium term because of the reduction in stockpiles. However, other industry insiders believe the pressure will increase on the back of lower temperatures in central and northern regions, resulting from stronger winds and Typhoon Pulasan, which slows down power demand.
Coal stocks at the 9 largest ports totaled 22.92 mio t (-0.06 mio t w-o-w).
Indonesian 5,900 GAR marginally rose to 92 USD/t, supported by growing tender purchases from Chinese consumers, expecting stronger coal consumption. On the Indian side, the demand is also forecasted to grow in the next few weeks as industrial activity intensifies ahead of the September-October holiday season. Also, the demand from Vietnam is recovering owing to the resumption of operation at coal-fired power plants, that were shut down because of the recent Typhoon Yagi.
Furthermore, the supply from Indonesia was limited due to the holidays, with traffic on the Lalan River back on track, that may lead to improved supply of low-CV material from South Sumatra.
Australian High-CV 6,000 slumped below 137 USD/t. While seasonal restocking provided partial support for Australian quotations, the strong supply put pressure on high-CV coal.
After a sharp decline a week earlier, Australian HCC metallurgical coal index stabilized at 180-181 USD/t on better Chinese demand. Nevertheless, the supply still exceeds the demand, with negative outlook prevailing in the steel market. Indian consumers say they are ready to resume purchasing if steel prices rise. Quotes of Australian PCI coal, after a significant drop a week earlier, stayed unchanged at 140 USD/t.
Market participants believe, that under current conditions, further movement of indices depends on the developments in China, with many expecting a continued downtrend.
Source: CCA Analytics
