World coal market: brief overview

Last week, European thermal coal indices rose above 120 USD/t. Quotes remain supported by low stockpiles, higher power prices, expectations of cold weather, as well as price volatility in the oil and gas market on the back of uncertainty in the Middle East geopolitical situation.

Gas quotations at TTF hub corrected downward to 435.05 USD/1,000 m³ (-7.92 USD/1,000 m³ w-o-w). Coal stocks at ARA terminals stood flat at 3.6 mio t, the lowest level over 2.5 years.

South African High-CV 6,000 strengthened to 110-113 USD/t due to continued growth in the European market and strong demand in the Asia-Pacific. However, there was some slowdown in demand from India.

Transnet was officially split into two legal entities: a railway operator and a management company, as part of reforms from October 01, 2024. The initiative was a condition for the 2.7 billion USD budget allocation and will also enable third-party operators to access the railway infrastructure.

Exxaro Resources plans to ramp up its coal production in South Africa up to 50 mtpy over the next few years by developing the Matla mine. In 2024, Exxaro forecasts production at 40.4 mio t (-2.1 mio t vs. 2023), while exports are expected to reach 6.7 mio t. Industry representatives say the cost of production in South Africa remains high.

In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao were flat at 123 USD/t after the end of the Golden Week celebrations on October 7. Trading activity was low on expectations that demand will gradually decline over the coming weeks, while production, on the contrary, will rise to multi-month highs. In addition, owing to the high rate of imports, some market participants expect purchases ahead of winter to provide limited support to local quotations.

China’s National Development and Reform Commission (NDRC) held a press conference, stating that coal stocks at major thermal power plants exceed 200 mio t, which is a historical maximum sufficient for 30 days. However, the expectations of market participants were not met, as the topic of new economic stimulus was left aside.

Moreover, thermal power plants in the northeastern provinces have already replenished coal inventories ahead of the heating season, which starts in mid-October.

Indonesian 5,900 GAR totaled 93 USD/t (+1 USD/t w-o-w), while the price of 4,200 GAR climbed to 52 USD/t (+1 USD/t w-o-w) on steady demand from the Philippines, Vietnam and China, replenishing stocks for winter season.

Australian High-CV 6,000 surged to 148-150 USD/t, driven by robust demand from Japan and other countries in the Asia-Pacific. Shipments at Australian seaports fell 6% over the week from 7.1 mio t to 6.7 mio t, while queues extended from 50 to 63 vessels, following reduced capacity related to equipment maintenance at some terminals in anticipation of November, which is typically associated with cyclones.

Japan’s Tohoku Electric Power contracted with an Australian exporter to supply thermal coal (6,000 NAR) from October 01, 2024 to September 30, 2025. The price was linked to the index as benchmark negotiations, which are usually completed by October 01, have stalled.

Australian HCC metallurgical coal index continued to rally above 205 USD/t amid stimulus measures in China. Furthermore, operations at Glencore-owned Oaky Creek mine have yet to resume. After an accident at the plant, a week later, the investigation is still ongoing. An Asian coke producer reported the event delayed shipments from the Oaky Creek mine until the end of November. As a result of this and several other incidents, the government lowered its metallurgical coal export forecast for July 2024-June 2025 by 6.4% to 161 mio t.

Japan’s Nippon Steel and South Korea’s POSCO fixed the benchmark for LV PCI coal for Q3 2024 at $175/t FOB with Australian producer Foxleigh, down 6 USD/t from the Q2 2024 benchmark. Market participants comment that the sharp fall in metallurgical coal prices and the relative stability of PCI market made negotiations more difficult, resulting in a delayed agreement between the parties.

Source: CCA Analytics

World coal market: brief overview

Coal exports are profitable for all but coal companies