World coal market: brief overview

Over the past week, European thermal coal indices ranged between 119-122 USD/t. The quotes were supported by high natural gas prices, as well as cold snap forecasts for November. Coal and gas-fired generation in Europe increased on the back of reduced renewables and colder weather, pushing electricity prices in Germany to €113.15/MWh (vs. €84.97/MWh w-o-w). The share of renewables in the country’s energy mix fell from 62% to 53%, while the share of fossil fuels rose from 38% to 47%.

Gas quotations at the TTF hub corrected slightly downward to 459.66 USD/1,000 m³ (-1 USD/1,000 m³ w-o-w). Partial pressure on gas indices was exerted by Goldman Sachs warning about a possible drop in prices, if the EU continues to ramp up gas supplies from Russia. Coal stocks at ARA terminals rose to 4.1 mio t (+0.28 mio t w-o-w).

South African High-CV 6,000 held steady at last week’s level of around 110 USD/t. Trading activity is declining ahead of holidays in India (Festival of Lights, celebrated on October 31). Meanwhile, Indian sponge iron producers took a wait-and-see attitude and plan to resume buying material for January in a week. On October 24, Cyclone Dana hit the east coast of the country and affected operations at some ports, including Dhamra, Paradip and Haldia.

Stockpiles at the Richards Bay Coal Terminal (RBCT) reached a high of 3.96 mio t (+0.3 mio t w-o-w) since 2021, while export shipments plunged over the week by 30% to 0.83 mio t (vs. the weekly average of 0.95 mio t in 2024.

In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao stood at 120 USD/t, virtually unchanged from last week’s level.

Quotations were supported by suspension of production by some small companies due to depletion of their monthly quota. Coal consumption at power plants in 8 coastal provinces increased from 1.87 mio t/day to 1.93 mio t/day.

However, the demand remains limited and some market participants expect lower FOB prices. Furthermore, temperatures are forecasted to be 1-3°C above seasonal average until November 05, while the completed maintenance of the Daqin rail line is expected to boost port stockpiles up to 1.20 mio t/day, driven by higher rail shipments.

Inventories at the 6 largest coastal thermal power plants declined to 14.72 mio t (-0.15 mio t w-o-w), while coal stocks at the 9 largest ports totaled 25.63 mio t (+0.58 mio t w-o-w).

Indonesian 5,900 GAR corrected to 93.6 USD/t (-0.20 USD/t w-o-w). Low-CV 4,200 GAR was stable at 52.3 USD/t.
Indonesian coal quotations were under slight pressure, given the lack of strong buying interest in the spot market, caused by large coal stocks held by consumers. However, some exporters do not plan a significant increase in supply until the end of the year, as they are not interested in a further drop in prices.

Australian High-CV 6,000 climbed above 145 USD/t amid terminal maintenance ahead of the cyclone season (November-April). Abbot Point Coal Terminal (APCT) is carrying out shiploader maintenance from October 23 to November 10, PWCS is performing shiploader servicing from October 31 to November 2, while berth maintenance is underway at Hay Point Coal Terminal from October 24 to November 07.

Australian HCC metallurgical coal index strengthened to almost 205 USD/t, backed by the activity of Chinese steel manufacturers, which stepped up production, following an improvement in margins, which were negative back in September.

Glencore announced a 113% hike in metallurgical coal production to 11.1 mio t in January-September 2024 (up from 5.2 mio t y-o-y), that was driven by the acquisition of a 77% stake in Canada’s Elk Valley Resources from Teck Resources for 6.93 billion USD on July 11, 2024. According to the company’s forecasts, coal extraction will total 19-21 mio t by the end of 2024.

Source: CCA Analysis

World coal market: brief overview

Coal exports are profitable for all but coal companies