Over the past week, European thermal coal indices kept falling to the level of 115 USD/t, pressured by lower power prices in Germany. Furthermore, Poland built up large coal inventories, while Colombia boosted steam coal exports from 0.81 mio t to 1.30 mio t (+60% w-o-w), including shipments to EU countries.
Gas quotations at the TTF hub strengthened to 512.91 USD/1,000 m3 (+6.28 USD/1,000 m3 w-o-w), driven by active withdrawals from EU storage, resulting in a reduction to 85% of the capacity. Market participants are concerned about the escalation of the conflict between Russia and Ukraine, as well as possible sanctions against Russian LNG. Coal stocks at ARA terminals decreased to 3.86 mio t (-0.09 mio t, or -2.3% w-o-w).
South African High-CV 6,000 ranged between 108-110 USD/t, following the correction in the European market. The demand from India was weak, caused by increased local supply and reduced power generation. The border with Mozambique was reopened, bringing South African coal trucking to the port of Maputo back to normal.
In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao eased 1 USD/t to 114 USD/t amid limited demand in the spot market. Moreover, suppliers were lowering prices due to calls from port administrations to bring down inventories, which had noticeably increased over the past week.
Also, end users are in no hurry to conclude deals given expectations of further price cuts. Meanwhile, Shenhua is expected to significantly expand its presence in the spot market from January 2025, while about 30% of traders in the domestic market suspended their activities because of the drop in quotations over several months.
Many regions experienced above normal temperatures, which led to a reduction in daily coal consumption at the 6 largest coastal thermal power plants from 822 kt to 809 kt.
Inventories at the 6 largest coastal thermal power plants rose slightly to 14.49 mio t, while coal stockpiles at the 9 largest ports climbed to 30.12 mio t (+1.2 mio t w-o-w).
Indonesian 5,900 GAR stood flat at last week’s level of 94 USD/t, while 4,200 GAR marginally adjusted below 52 USD/t.
The demand from the Asia Pacific remained subdued in the spot market. However, many producers say their resources have been sold out for the rest of the year and are in no hurry to offer material for January 2025 at current prices. The recent heavy rains had some impact on coal production in such regions as Java and Sumatra.
Australian High-CV 6,000 slipped below 135 USD/t, moving lower within a two-month downtrend. Furthermore, the anti-coal protest at the Port of Newcastle finished and export shipments improved compared to the previous week.
The demand from Japan declined on the back of high inventories and the start-up of Unit #2 at the Onagawa nuclear power plant by Tohoku Electric. In October, Japan cut imports of thermal coal to 10.4 mio t (-18% to September 2024).
Australian HCC metallurgical coal index went down to 202 USD/t on unfavorable fundamentals. Suppliers are facing difficulties in selling December loadings. Pressure is also exerted by falling prices in the Chinese domestic market, pushing buyers to a wait-and-see attitude.
Market participants note growing activity in the market for Low-CV material, which is traded at a 5-20% discount to premium coal, as steel producers’ margins remain tight.
Source: CCA Analysis
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