The European thermal coal market continued its downward trend below 92 USD/t. The pressure on indices was exerted by such factors as a sharp drop in gas prices, increase in stockpiles, as well as easing geopolitical tensions.
Gas quotations at TTF hub fell to 449.12 USD/1,000 m3 (-55.51 USD/1,000 m3 w-o-w) amid negotiations between the US and Russia on the settlement of the conflict in Ukraine, as well as the urging of German generating companies to weaken the requirements for mandatory gas reserves from the current 90% to 80%. Coal stocks at ARA terminals climbed to 3.75 mio t (+0.18 mio t or +5% w-o-w).
South African High-CV 6,000 kept sliding down to 88-89 USD/t, hitting a 12-month low due to the wait-and-see attitude of major buying countries, including India, where domestic supplies are at high levels.
South Africa’s Sasol will suspend coal exports from May 2025 (two years earlier than planned) to improve the quality of its Secunda synthetic fuel plant. Sasol exported 2.1 mio t last year. All of the company’s mines (30.0 mio t/year) will be refocused on domestic supply.
In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao dropped to 100 USD/t because of high supply and limited industrial activity. With large inventories, many coal producers are wary of further price declines, predicting that supply will exceed demand up to June, as stable production rates are expected through the summer. Consequently, suppliers including Shenhua extended discounts on their material. Spot indices in China were below contract prices, raising concerns for miners in the short term.
Some market participants are not making adjustments to contracts, so they are likely to be unfulfilled.
Several generating companies suspended imports in favor of domestic supplies. CHN Energy halted import supplies for its power plants to focus on purchases from its own deposits in China. Huaneng Group took a similar action. According to some estimates, these moves will result in a 3 mio t/month reduction in imported coal demand.
Inventories at the 6 largest coastal thermal power plants decreased to 13.63 mio t (-0.13 mio t w-o-w), while coal stocks at the 9 largest ports totaled 29.66 mio t (+0.45 mio t w-o-w). The consumption increased to 788 kt vs. 771 kt a week earlier. The growth of consumption may be limited, given the forecast of warmer weather in the near future (temperature increase of more than 10°C is expected in the eastern part of China).
Quotes of Indonesian coal moved in mixed direction. Indonesian 5,900 GAR declined to 85 USD/t, the price of 4,200 GAR stood flat at 48.5 USD/t. Pressure on High-CV coal was exerted by competition from South Africa. Low-CV material was supported by Chinese demand.
The Indonesian Ministry of Energy and Mineral Resources ruled that from March 01, 2025, all export sales should be based on the country’s domestic price indices (HBA). The indices will be published more frequently so that there is no significant lag between world and domestic Indonesian prices. Suppliers fear that buyers will be reluctant to switch to the new indices because of the lack of transparency and possible unreliability. However, authorities expect the new law to increase tax revenues and not affect coal exports.
Australian High-CV 6,000 tumbled below 100 USD/t, following the general negative trend on the back of limited demand, related to the off-season and high stockpiles.
Australian HCC metallurgical coal index sank to 187 USD/t as supply was outstripping demand. Furthermore, the demand in India is featured by the need for small shipments and the inability to offset the fall in demand in Japan, South Korea and Southeast Asia. Meanwhile, American and Canadian suppliers are also actively offering their material to Indian consumers.
Quotes were also under pressure from reports of a possible cut in steel production in China, where there is an oversupply of its own coking coal.
Source: CCA Analysis
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