Last week, European thermal coal indices strengthened to 110-112 USD/t, supported by such drivers as rising gas and electricity prices, as well as a reduction in renewable generation. Over the past week, the share of fossil energy sources in Germany’s energy mix increased from 40% to 60% making coal-fired generation more cost-effective than gas-fired generation. Coal price fluctuations were also caused by general volatility in the energy markets.
Gas quotations at the TTF hub amounted to 523.88 USD/1,000 m3 (+24.51 USD/1,000 m3 w-o-w), because of active consumption and reduction of gas reserves in the EU underground storage facilities to 60%, as well as plans of the European countries to impose sanctions against Russian LNG. Coal stocks at ARA terminals climbed to 4.37 mio t (+0.06 mio t w-o-w).
South African High-CV 6,000 rebounded from 10-month lows, however stayed below the 100 USD/t level. The Medium-CV material also moved lower as demand in India remains constrained by high inventories and falling sponge iron prices.
In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao slashed to 94 USD/t amid rising stockpiles and weak demand ahead of the Chinese New Year. Many coal companies significantly cut prices despite the expected sharp cold snap on January 24-27.
Coal inventories at the 6 largest coastal thermal power plants rose to 14.22 mio t (+0.46 mio t), while stocks at the 9 largest ports totaled 25.32 mio t (+0.07 mio t w-o-w).
Coal consumption at the 6 largest coastal thermal power plants decreased from 835 kt/day to 779 kt/day (-56 kt/day or -6.7% w-o-w).
Indonesian 5,900 GAR corrected to 89 USD/t, while 4,200 GAR remained below 49 USD/t on limited demand on the spot market ahead of Chinese New Year and sufficient stocks in India and China. Meanwhile, the buyers’ interest is still observed mainly towards Low-CV material.
The Indonesian government decided to withhold 100% of USD revenues of mineral exporters in the local financial system for one year from March 01, 2025, potentially increasing production costs and reducing output by restricting companies’ cash flow. This initiative will be the result of revised existing requirements to withhold 30% of exporters’ revenues for a 3-month period.
Australian High-CV 6,000 firmed to 115-117 USD/t, following partial short covering on the market along with rising European indices.
Australian HCC metallurgical coal index plunged below 190 USD/t, resulting from the increased supply on the spot market and limited demand. Pressure was also exerted by India’s import quotas to protect domestic producers, as well as the availability of more affordable alternatives from other countries, including the US, which boosted exports of the metallurgical material last week by 40% to 0.9 mio t. Furthermore, buyers have been slow to make deals as they await certainty on US tariff policy after the arrival of the new administration.
Source: CCA Analysis
