World coal market: brief overview

Over the past week, European thermal coal indices slipped below the support level of 110 USD/t. Pressure remains in place because of tight demand, falling gas and electricity prices, as well as stable inventories at ARA terminals. German electricity plunged nearly 70% over the week amid a surge in solar and wind generation.

On the spot market, power contracts dropped from 265 EUR/MWh to 86-87 EUR/MWh. Furthermore, the share of renewables in Germany’s energy mix rose from 50% to 73% over the same period, while the share of fossil fuels declined from 50% to 27%.

Gas quotations at the TTF hub sank to 443.99 USD/1,000 m³ (-40.52 USD/1,000 m³ w-o-w). Gas supplies remain stable, which is also due to limited demand for LNG in the Asia-Pacific. Coal stocks at ARA terminals slightly decreased to 3.75 mio t (-0.14 mio t w-o-w).

South African High-CV 6,000 dipped below 103-105 USD/t on negative dynamics in the European market, higher stocks at Richards Bay Coal Terminal (RBCT) as well as limited demand from India.

The temporary closure of the borders with Mozambique resulted in a large number of truckloads of raw materials piled up at the border and in the port of Maputo, so shipments have yet to normalize. According to authorities, the protests will negatively affect Maputo’s export shipment performance in December 2024-January 2025.

With increased rail shipments in Q4, South African coal exports through the RBCT terminal are expected to total 52.36 mio t in 2024 (+5.15 mio t or +11% vs. 2023). Nevertheless, this figure remains well below the annual average of 70 mio t in 2013-2020.

In October-November, monthly shipments to RBCT rose to 5 mio t vs. 4.08 mio t in January-September 2024.
In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao fell 3 USD/t to 110 USD/t, following limited demand.

The price differential between the spot market and long-term contracts is narrowing, resulting in weaker interest from generating companies on the spot. Shenhua lowered third-party coal prices again, the fourth decrease in the last month. Moreover, due to negative expectations, some traders sought to sell off their volumes as soon as possible, which led to a reduction in stockpiles. Some market participants forecast that the bottom quotation for 5,500 NAR material is at 104 USD/t FOB Qinhuangdao.

Coal inventories at the 6 largest coastal thermal power plants decreased to 13.91 mio t (-0.48 mio t w-o-w), stockpiles at the 9 largest ports totaled 27.65 mio t (-1.18 mio t w-o-w).

Indonesian 5,900 GAR sagged below 93 USD/t, while 4,200 GAR lost 0.5 USD/t to 50/5 USD/t, given high supply and subdued demand on the spot market. Meanwhile, heavy rains in South Kalimantan and Sumatra, which affected production and transshipment, did not support prices.

Australian High-CV 6,000 tumbled below 123 USD/t on weak demand from key consuming countries. South Korea is reducing its purchases of Australian thermal coal for reasons of its high cost compared to material from other countries, a trend that is expected to continue into 2025.

Australian HCC metallurgical coal index strengthened to 205 USD/t. Despite weak buying interest from Chinese consumers ahead of the New Year holidays, some demand was seen in southern China, supporting prices for premium grades.

The Port of Gladstone (Queensland), saw a 24-hour strike by port workers over a months-long disagreement with their employer over an 8-hour work day. The initiative had a negative impact on metallurgical coal shipments, but an assessment of the lost volume has not yet been made.

Source: CCA Analysis

World coal market: brief overview