Over the past week, European thermal coal market saw a rise to 96-97 USD/t, supported by strengthening gas prices and potential disruptions in South African exports.
Gas quotations at the TTF hub climbed to 441 USD/1,000 m3 (+20 USD/1,000 m3 w-o-w), driven by issues with supplies from Norway (at the Norwegian gas processing plant Kollsnes), as well as seasonal maintenance.
Furthermore, the announcement of the EU’s 17th package of sanctions against Russia (although not gas-related, but rather aimed at Russian oil production and vessels) may have led hedge funds to build up their long positions in TTF paper contracts. Also, competition with Asian consumers for LNG supplies could have prompted European buyers to raise bids.
The level of gas storage reserves in the EU was 44.9% of the full capacity (43.4% a week earlier, down 22% from 2024).
South African High-CV 6,000 ranged between 87-90 USD/t during the week, following the upward trend in European prices. Negotiations on wage indexation between South Africa’s Transnet and the UNTU trade union were extended until June 10 to ensure that the Commission for Conciliation, Mediation and Arbitration (CCMA), which is mediating the talks, could submit a revised offer.
Approximately 26,000 Transnet workers affiliated with UNTU were ready to go on strike on May 22, after wage indexation talks stalled. UNTU rejected Transnet’s offer of a 6% wage increase for union members, demanding a 10% hike instead. Transnet argues its offer is fair and above the rate of inflation.
A prolonged strike by UNTU union members could significantly affect South African exports of steam coal. While negotiations continue, the Maputo Port Delegation (MPDC) in neighboring Mozambique said the port has capacity to accept additional volumes if South African material.
In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao dropped to 86 USD/t. The downward trend continues on weak thermal power demand and oversupply of coal on the domestic market. Shenhua Group, the largest coal supplier in China, on Sunday evening lowered purchase prices from third-party producers by 0.14-0.97 USD/t, that led to a decline in the market. Some producers followed Shenhua, cutting prices by 0.7-1.4 USD/t to promote sales.
Inquiries for spot shipments in northern ports slightly increased. This resulted in inventories at the 9 largest ports decreasing to 31.95 mio t (-1.15 mio t w-o-w, +6.35 mio t y-o-y), while coal stocks at the 6 largest coastal TPPs totaled 14.42 mio t (-0.02 mio t w-o-w). The consumption was up to 761 kt/day from 758 kt/day a week earlier.
Indonesian 5,900 GAR slipped to 79 USD/t, while the price of 4,200 GAR plunged to 46 USD/t. Chinese demand remains subdued, besides, the upcoming rainy season in China is expected to lower thermal power consumption.
On the supply side, rains continue to disrupt coal production and logistics in some parts of Kalimantan. However, weak buyers’ interest in key destinations is offsetting the effects of these constraints.
Taipower has shut down Taiwan’s last operating nuclear reactor. The 951 MW Maanshan Nuclear Power Plant’s second unit, which provided about 3% of Taiwan’s electricity, was officially halted on May 17, after 40 years of operation.
The government has no plans to make up the shortfall with coal-fired generation. Instead, four large gas-fired power plants with a capacity of nearly 5 GW are scheduled to come online in 2025, along with about 3.5 GW of wind and solar generation. Also, no new coal-fired power plant projects are expected, and all existing coal-fired thermal power plants will be replaced by gas-fired plants at the end of their lifespan.
Australian High-CV 6,000 stayed at 102 USD/t, supported by deliveries to Europe, which removed some oversupply on the back of low interest from traditional Asia-Pacific consumers.
Between June 2025 and December 2026, 8.2 mio t of Australian material with a min CV of 5,700 kcal/kg NAR is scheduled to be delivered to Mexico’s CFE. CFE normally favors Colombian thermal coal in its regular tenders, but the low freight and more attractive FOB Newcastle prices gave the Australian coal a competitive advantage this time.
Australia’s HCC metallurgical coal index stood in a sideways trend at 191 USD/t, capped by limited trading activity, caused by a large gap between bid and ask prices in the Indian market. Additional factors of reduced demand are the approaching monsoon season, as well as lack of clarity on India’s coke import quota policy.
India’s coke import quotas expire on June 30. It is risky for coking plants to order metallurgical material until the government publishes updated rules.
Source: CCA Analysis
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