Over the past week, European thermal coal indices rebounded above 96 USD/t after reaching a one-year low. Quotes were supported by such factors as strengthening of gas prices amid aggravation of geopolitical tension due to Europe’s refusal to settle the conflict peacefully.
Gas quotations at the TTF hub slightly improved to 455.04 USD/1,000 m3 (+5.92 USD/1,000 m3 w-o-w) after EU leaders spoke against the peace negotiations. Furthermore, European gas storage reserves fell to 37% for the first time in three years, while withdrawals nearly doubled year-on-year.
South African High-CV 6,000 fell to 87-88 USD/t, hitting a 19-month low, because of the wait-and-see attitude of major buying countries, including India, which cut coal imports by 33% to 4.11 mio t in January.
The South African government plans to lower the CO2 tax for Eskom, Sasol and other coal consumers, reducing the financial burden and preserving the dominance of coal-fired generation in the country.
In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao lost 3 USD/t, sinking to 97 USD/t, as a result of strong supply and high stockpiles at the ports, which reached a historic high. Despite this, China’s National Development and Reform Commission (NDRC) urged companies to ramp up production, to the surprise of market participants.
The China National Coal Producers Association (CNCA) and the Coal Transportation and Distribution Association (CCTD) issued a joint statement calling on mining companies to adjust production in line with the demand and on coal consumers to reduce imports of the Low-CV material. The CNCA reiterated its call for the government to impose import restrictions when prices drop triggered by oversupply. However, the statement did not support prices as market sentiment remained unchanged.
Inventories at the 6 largest coastal thermal power plants decreased to 13.14 mio t (-0.49 mio t w-o-w), while coal stocks at the 9 largest ports totaled 31.40 mio t (+1.74 mio t w-o-w). The consumption increased to 817 kt vs. 788 kt a week earlier.
Quotes of Indonesian coal moved in mixed direction. Indonesian 5,900 GAR lowered to 84.5 USD/t, the price of 4,200 GAR slightly strengthened to 48.6 USD/t. Pressure on High-CV coal was exerted by buyers’ wait-and-see attitude, resulting from the new requirement of the authorities regarding Indonesian indices. Quotes of Low-CV material were supported by Chinese demand.
The Association of Indonesian Coal Producers urged the government to ease the requirement, obliging mining companies to enter into export contracts, using the domestic HBA benchmark, starting from March 01, 2025, and grant a 6-month grace period. Coal companies are wary of possible fines and foreign buyers pulling out of deals.
Australian High-CV 6,000 plunged below 97 USD/t on the back of a negative trend and limited demand in view of the off-season and high stockpiles. Additional pressure comes from a week-on-week 6.8% increase in export shipments from Colombia and a 64.8% rise in weekly supplies from the US.
Australia’s HCC metallurgical coal index continued to slide below 185/t, following oversupply and limited demand, capped by the need for small parcels. China’s announcement of GDP growth targets of 5% in 2025 and widening budget deficit did not add optimism to the market. Moreover, Chinese coal is proving to be cheaper than imported Premium LV material. Also, the market is expecting a new round of coke price cuts in China.
Source: CCA Analysis
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