World coal market: brief overview

Over the past week, European thermal coal indices declined below 94 USD/t. The pressure was exerted by reduced volatility in gas prices, as well as the transition season, when energy consumption volumes shrink, while renewable generation rises. Lower inventories at ARA terminals supported the quotes, however, as of May 05, stockpiles increased 2% up to 3.65 mio t (+0.07 mio t w-o-w).

Gas quotations at the TTF hub strengthened to 401.67 USD/1,000 m³ (+2.88 USD/1,000 m³ w-o-w) on the back of 3-year maximum rates of fuel injection into European underground storage facilities in the first half of May. Currently, the level of gas storage reserves in the EU is 43.4% of the full capacity.

South African High-CV 6,000 slipped below 89 USD/t, following the European market, and also due to weakening demand from consumers in India, where there is ample domestic supply. Furthermore, Indian sponge iron producers suspended purchases in view of the prolonged drop in prices for their products. Consumers also took a wait-and-see attitude amid the slowdown in manufacturing activity and on the expectation that rupee appreciation would make imports cheaper.

Major labor union United National Transport Union (UNTU) plans to hold a final meeting with executives of South African rail operator Transnet on May 14-15 to reach an agreement and avoid a strike. In the past two weeks, a majority of UNTU members have already voted in favor of the strike.

In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao eased to 88 USD/t, continuing the downward trend, given higher stockpiles and reduced consumption by power plants. Additional pressure was also exerted by lower prices from some suppliers.

Nevertheless, fundamentals improved, resulting from the easing of the tariff war between the US and China with a 90-day pause, as well as the announcement of a new stimulus package by the Chinese authorities, although this has not yet supported prices. Some market participants expect quotations to strengthen by the end of May, when producers start replenishing stocks ahead of the summer season.

Inventories at the 9 major ports increased to 33.10 mio t (+1.19 mio t w-o-w), while coal stocks at the 6 largest coastal TPPs totaled 14.38 mio t (+0.35 mio t). The consumption was down to 747 kt/day from 758 kt/day a week earlier.

Indonesian 5,900 GAR plunged below 80 USD/t, the price of 4,200 GAR went down below 47 USD/t because of negative dynamics in the Chinese market. Following the lack of demand in India and China, Indonesian coal companies are preparing for a further drop in prices despite the restriction of production and shipments, caused by heavy rains since April in Kalimantan and Sumatra, as well as the collapse of a bridge in early May on the Mahakam River, which is a key transportation artery for East Kalimantan.

Australian High-CV 6,000 firmed above 102 USD/t after the announcement of a set of tenders in South Korea for steam coal supply as well as reports of a 90-day pause in the tariff war between the US and China. Quotes were also supported by the statement of representatives of the Kooragang coal terminal in the port of Newcastle about the planned modernization of three shiploaders, starting from the middle of 2025, that may lead to supplies’ disruptions.

Australia’s HCC metallurgical coal index climbed above 190 USD/t, driven by limited spot market supply from Australia. Meanwhile, some Indian consumers switched to Canadian material or temporarily postponed purchases.

Insufficient demand and the refusal of Indian consumers to meet the price hike convinces traders that the level of 195 USD/t FOB Australia for HCC coal is currently not competitive.

Source: CCA Analysis

World coal market: brief overview