Over the past week, European thermal coal indices recovered above 111 USD/t after a prolonged decline. Quotes were supported by rising gas and electricity prices. Furthermore, supplies of Colombian material decreased 38% over the week, including to EU countries.
Gas quotations at the TTF hub rose to 494.23 USD/1,000 m3 (+50.24 USD/1,000 m3 w-o-w). The contract on Russian gas transit through Ukraine expires at the end of the year. Currently, neither the Ukrainian nor Russian authorities are planning to extend it. Market participants are also concerned about threats by Qatar (one of the largest LNG exporters), to halt deliveries to Europe due to new European legislation that penalizes non-compliance with requirements to reduce carbon emissions. Coal stocks at ARA terminals increased to 4.21 mio t (+0.46 mio t or +12% w-o-w).
South African High-CV 6,000 strengthened above 105-106 USD/t on the back of a rebound in the European market. However, the Mid-CV material became cheaper as demand in India and the Asia-Pacific remains limited, because of high inventories.
In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao dropped 3 USD/t to 107 USD/t on limited demand from the industrial sector and above normal temperatures. High supply and pessimistic consumption forecasts are also weighing on market sentiment. Consequently, mining companies lowered prices by 1.4-4.2 USD/t to stimulate sales.
Indonesian 5,900 GAR held below 93 USD/t, while 4,200 GAR lost 0.5 USD/t to 50 USD/t amid low trading activity on the spot market ahead of Christmas holidays. The downward trend in China is also putting pressure on the market.
Meanwhile, heavy rains had a negative impact on loading in South Kalimantan. Downpours also partially paralyzed road transportation of coal in mining regions. The rainy season in Indonesia usually intensifies in December and peaks in mid-January, so unfavorable weather conditions are expected to affect loading next month.
Australian High-CV 6,000 stood below 123 USD/t, as the downward trend continued because of weak demand from key consuming countries.
Australian HCC metallurgical coal index plunged below 195 USD/t. In China, where quotations are also falling, the demand remains weak, so Chinese coke producers are again planning to lower prices for their products. Buyers prefer to take a wait-and-see stance, given the ongoing downtrend.
Moreover, according to the updated data, the probability of La Nina formation lowered, so the risk of supply disruption from Australia decreased. Australian authorities revised upward their forecast for metallurgical coal exports in fiscal 2024-2025 (ending June 30) by 2 mio t to 163 mio t.
Source: CCA Analysis
