Last week, thermal coal indices in Europe renewed their historic highs, reaching the mark of 300 USD/t, after that the quotes corrected to 225 USD/t due to high volatility.
A jump in prices at the European gas market contributed to the growth of quotations – on 06.10.2021 paper contracts at the TTF hub exceeded 1900 USD/1,000 m3, after which a correction followed. European gas storages are currently 76% full, but it is still the lowest figure for the last 10 years and not enough for the approaching winter season. According to experts, the launch of Nord Stream 2 this winter is unlikely to increase Russian gas supplies to Europe and help the EU cope with the energy crisis. ARA coal stocks stood at the level of 4.46 mio t (+0.02 mio t to September 29, 2021).
Increased demand of consumers from Europe and Asia-Pacific countries, which seek to replenish stocks on the threshold of the winter season, had a positive effect on South African coal indices, amounting to 218 USD/t. Additional factor of price growth is problems with the railway line, connecting the coal-mining provinces of South Africa with the port of Richards Bay. Richards Bay coal stocks amounted to 3.18 mio t (-0.39 mio t to September 29, 2021).
From 01.10.2021 to 07.10.2021, China is declared a public holiday in connection with the celebration of China’s foundation day.
On October 06, 2021, it became known that amid a growing energy crisis and a shortage of coal reserves at factories, the Chinese government has allowed Australian coal to be cleared from temporary storage facilities on the Chinese territory after an informal ban on coal imports from Australia lasted almost a year. A total of around 1 mio t of Australian coal have piled up in China’s bonded warehouses during the year.
On October 07, 2021, Chinese government suspended operations of 27 coal mines and the Tongpu railway line in China’s largest coal mining province, Shanxi, due to flooding and inclement weather.
High trade activity of consumers from Asia-Pacific countries, as well as limited supply of coal on the world market supported Australian prices above 241 USD/t.
Indonesian coal producers have not been able to ramp up production in the coal amid rising demand, leaving the price of Indonesian 5900 kcal/kg GAR at 150 USD/t. Production recovery has been hampered by heavy rains in South and East Kalimantan in September, as well as logistics, infrastructure and financing issues. Supply shortages on the back of increased demand from Asian generators continue to drive up Indonesian coal prices.
Despite downward trend in the middle of the week, the market seems to search for support. In addition to South Africa and Indonesia, Russian supply is extremely tight. FOB prices for Russian material are reluctant to go down – see the table below.
Strong demand from India has offset the downturn in trading activity by Asian traders, and strengthened Australian coking material prices to 396 USD/t. An additional factor behind the price increase is the shortage of coking material on the global market.
Source: CAA Analytics