Over the past week, European thermal coal indices strengthened above 121 USD/t. The indices were supported by the growth of gas prices after an unplanned reduction in supplies from the Norwegian Oseberg field, as well as forecasts of a strong cold snap in November. Gas quotations at the TTF hub reached 478 USD/1,000 m3 (+27 USD/1,000 m3 w-o-w). Coal stocks at ARA terminals increased to 3.88 mio t (+0.34 mio t w-o-w).
South African High-CV 6,000 climbed above 110 USD/t on the back of stable demand from Indian consumers. Market participants expect an increase in buying activity after the holidays at the end of October (Diwali Festival of Lights – the main Hindu holiday – is celebrated on October 31).
In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao adjusted below 121 USD/t. Shenhua, the largest supplier, again cut purchase prices from third-party producers. This discouraged some market participants, who were expecting prices to rise after a sharp drop in temperature in the northern and central provinces of the country. Moreover, the demand from cement, coke and chemical producers slowed down.
Some potential buyers took a wait-and-see attitude, hoping for further weakening of quotations. Nevertheless, most of the market participants do not expect significant fluctuations of indexes in one direction or another.
Some even forecast that due to sufficient domestic supply FOB prices in the country’s seaports may move in a tight range throughout the winter.
Indonesian 5,900 GAR stood at 93.8 USD/t (+0.8 USD/t w-o-w), while the price of 4,200 GAR fell to 52.3 USD/t (-0.2 USD/t w-o-w). Meanwhile, the market shows no significant buying interest towards Indonesian material, caused by high stockpiles and lower prices in the Chinese market.
Australian High-CV 6,000 dropped below 143 USD/t. One of the reasons was weaker spot demand, given the upcoming restart of three idle nuclear power plants in Japan. The three reactors with a total capacity of 2.75 GW should gradually resume operation in November-December.
Australian HCC metallurgical coal index kept sinking below 200 USD/t. Market experts point to negative trends on the paper market of metallurgical coal and steel in China, as well as sufficient supply of material on the spot, that may result in further correction. Stimulus measures, proposed by the Chinese government to support the economy, in particular, the construction sector, are not encouraging investors’ confidence.
Quotes of Australian PCI coal slipped below 160 USD/t, influenced by metallurgical index correction, despite current supply constraints. Furthermore, weak demand from Chinese consumers, in turn, had an additional negative impact on PCI price.
Source: CCA Analysis
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