Last week, European thermal coal quotations rose above 125 USD/t. Coal price indices were supported by such factors as increased consumption, cold weather, rising gas and electricity prices.
Furthermore, coal generation margins surged to 54.35 EUR/MWh, while a week earlier they were in a negative zone (-9.98 EUR/MWh).
Following a request from operator RTE, the 600 MW Emile Huchet coal-fired power plant in France, which was shut down in 2022, has been restarted. This plant is expected to be used on peak load days.
Gas quotations at the TTF hub surged to 478.21 USD/1,000 m3 (+28.04 USD/1,000 m3 w-o-w). The rate of withdrawals exceeded the flow rate, leading to a reduction in the EU underground storage facilities.
Market participants are also concerned about Russia’s operation to liberate the Kursk region, where the Suja gas transfer and measuring station is located.
Coal stocks at ARA terminals were flat at 3.9 mio t. Given current consumption rates, these stocks are supposedly sufficient for almost 3 months. However, there are large volumes of US high-sulphur material, that needs to be blended with coal of other origins.
South African High-CV 6,000 strengthened to 111-113 USD/t. The border for shipments to Mozambique and exports through the port of Maputo was opened on September 09, 2024, and currently authorities are focused on fixing the problem with traffic jam of 20 kilometers.
However, port officials warned that the unrest could resume in the coming days, putting South African coal shipments through Maputo at risk, particularly those carried by road. Port operator Grindrod had to declare a force majeure on all shipments last week.
In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao eased to 118 USD/t (-2 USD/t w-o-w). Pressure on quotations was exerted by warm weather, as well as the forecast that the temperature will exceed the seasonal norm by 1-2 C°.
Some market participants no longer expect that restocking ahead of winter can provide significant support to prices. Moreover, strong supplies are outpacing the demand.
Daqin rail traffic improved by 3% to 1.1 mio t/day in October, despite the maintenance. Some suppliers lowered prices, but this did not help much to encourage buyers due to high stockpiles.
Inventories at the 6 largest coastal thermal power plants rose to 15 mio t (+0.2 mio t w-o-w).
In Indonesia coal indices showed mixed dynamics. Indonesian 5,900 GAR lost 1 USD/t to 93 USD/t, while 4,200 GAR remained almost unchanged at the level of 52 USD/t. Low activity on the spot market is linked to restrained demand caused by an increase in Chinese stocks.
The pressure on quotations was also exerted by the strengthening of the US dollar. Supply is constrained by the rains that started in many coal producing regions, with some suppliers refocusing on domestic consumers or deliberately limiting production to avoid oversupply in the market along with pressure on prices.
Australian High-CV 6,000 dropped below 141 USD/t on the back of reduced demand in the Asia Pacific as well as the increased competition from Colombia, where the blockade of the Cerrejon railroad tracks, connecting the mine to the Puerto Bolivar export terminal, has finally finished.
Australian HCC metallurgical coal index climbed to 206 USD/t, following low supply and approval of support measures for the Chinese economy.
Chinese authorities confirmed a 10 trillion yuan (1.4 trillion USD) package of measures to support the country’s weakened economy by approving an increase in the local government debt ceiling.
The initiative also aims to stabilize the economy amid looming tensions with the U.S. under Donald Trump, who has promised to sharply raise import duties.
However, no additional measures to directly stimulate domestic demand were announced, potentially disappointing market participants. Meanwhile, the government’s September monetary stimulus support measures, which included interest rate cuts and support for stock and real estate markets, started to show a positive impact on the economy.
Source: CCA Analysis
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