World coal market: brief overview

Over the past week, European thermal coal indices continued to strengthen above 98 USD/t. Quotes were supported by the growth of gas prices amid geopolitical uncertainty, as well as reduction in ARA stockpiles.

Furthermore, coal supplies from Colombia were threatened by a sabotage on the railroad line, leading from the Cerrejon open-pit mine to the export terminal in Puerto Bolivar. Restoration work is underway, but the completion date is still unknown.

Gas quotations at TTF hub firmed to 470.64 USD/1,000 m³ (+15.60 USD/1,000 m³ w-o-w). European gas storage reserves extended their decline to 36%, driven by active withdrawals. Coal stocks at ARA terminals decreased to 3.69 mio t (-0.11 mio t or -2.4% w-o-w).

South African High-CV 6,000 corrected upwards above 88 USD/t after hitting a 4-year low. Meanwhile, Medium-CV material became cheaper, following weak demand from India, where stockpiles remain at high levels.

South African rail operator Transnet rejected the union’s demand for a 10% wage increase and offered only 5%, with a strike expected to bring coal export shipments to a halt. A two-week suspension is now in effect, after which the parties are expected to make one last attempt to reach an agreement. Grindrod said it is repairing 13 locomotives from Sierra Leone and will soon run them on the Transnet network as part of a private investor participation in rail infrastructure program.

Mining company Exxaro Resources warned shareholders that earnings for 2024 plunged 44% on falling coal prices. EBITDA is expected to range from 0.52 billion USD to 0.62 billion USD, down 16-30% from 2023.

In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao rose marginally above 97 USD/t on low activity of buyers, who still believe that the decline will continue because of the high stocks in the ports.

Meanwhile, the market is slightly supported by maintenance at some mines, resulting in supply constraints.

However, the pressure remains as heating season in the northern regions of China is coming to an end in mid-March.

Inventories at the 9 major ports remain near the historic high of 31.29 mio t (-0.11 mio t w-o-w), while coal stocks at the 6 largest coastal thermal power plants totaled 13.19 mio t (+0.05 mio t). The consumption decreased to 788 kt/day from 817 kt/day a week earlier.

Indonesian 5,900 GAR rose to 85.5 USD/t, the price of 4,200 GAR GAR strengthened to 49.5 USD/t on the back of moderate demand in China. Market participants still face uncertainty caused by the application of national Indonesian indices, which have higher price levels, compared to international quotations.

The Indonesian government is considering raising the coal mining tax by 1%, which would push up the cost of production.

Australian High-CV 6,000 surged above the 100 USD/t mark after hitting a 4-year low. Partial support was also provided by Cyclone Alfred, which forced some ports to temporarily suspend loading operations.

Australia’s HCC metallurgical coal index plummeted below 180 USD/t due to oversupply and low demand.

Interest from Indonesian buyers declined, while Chinese consumers are increasingly switching to local coal.

The low demand is supported by the recent resale by Chinese and other Asian end-users of several shipments of U.S. coal that was already in transit. Therefore, some traders refused to supply premium grades of coking material.

Source: CCA Analysis

World coal market: brief overview

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