Over the past week, European thermal coal indices climbed above 100 USD/t, primarily due to the closure of the May contract and the switch to higher June prices.
After a downward trend last week and a drop below 400 USD/1,000 m3 because of the long public holidays in Europe, gas quotations at the TTF hub rebounded on Monday. So, as of June 6, 2025, prices settled at 427.65 USD/1,000 m3 (+18.47 USD/1,000 m3 w-o-w). Currently, European underground gas storage (UGS) is almost 49.6% full (46.9% a week earlier). UGS facilities amount to 54 billion m3, which is 30% less than in the same period last year.
The likelihood of a strike by employees of the South African company Transnet, which would paralyze coal exports from South Africa, decreased after the RBCT terminal division, which is part of the UNTU union, voted to accept the management’s proposal on wages and employment guarantees. UNTU, which has already received a strike mandate, continues to vote among its members across the country on whether to accept the offer.
It remains unclear how long Transnet would be able to pay the proposed wage increase. Moody’s rating agency warned (as of May 2025) that, regardless of the strike, Transnet risks running out of cash in three months.
South African High-CV 6,000 rose above 90 USD/t, following the upward trend in the European market. However, the decline in the sponge iron and steel markets, combined with stable coal supply on Indian domestic market, is reducing buyers’ interest in imported coal and petcoke. Thus, with an offer price of around 70-71 USD/t for South African material at 5,500 kcal/kg, the demand price is 67-68 USD/t. Cement producers also show a slowdown in business activity.
In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao remain flat at 86 USD/t. Continued rains in eastern, southern, and central China dampened sentiment among coal market participants after recent relative stability. Rainy weather is expected to keep going until mid-July, cutting demand for thermal power and boosting hydropower.
At the end of May, Shenhua and Weiqiao Power lowered their purchase prices by 0.7-1.4 USD/t, adding pressure on domestic market prices. By the middle of the month, average daily temperatures are expected to rise, which may support prices. But until then, the domestic market may test the level of 83.5 USD/t, while a further decline could lead to intervention by Chinese authorities.
Inventories at the 9 largest ports fell to 29.69 mio t (-1.67 mio t w-o-w), which is nevertheless 4.62 mio t more than last year’s figures.
Indonesian 5,900 GAR got lower to 76 USD/t, while the price of 4,200 GAR sagged to 44 USD/t.
According to preliminary data from the Directorate General of Minerals and Coal (DGMC), coal production in Indonesia for the first 4 months of 2025 amounted to 223.2 mio t, which is 45.7 mio t or -17% less than in the same period last year (268.9 mio t).
If output rates remain unchanged, the annual production may total about 670 mio t, which is 164 mio t, or almost 20%, lower than the 2024 figure of 834 mio t. Nevertheless, the situation with coal extraction may change in H2 2025, and depending on market demand, the production could reach 750-790 mio t.
The reasons for the decline in mining were unexpectedly heavy rains that began in January and intensified in April, as well as a rapid weakening of global coal demand.
Furthermore, growing uncertainty regarding forward prices (caused by the pricing policy on trading platforms, introduced by the authorities in March) exacerbated the weakening interest of foreign buyers.
Australian High-CV 6,000 adjusted downward to 103 USD/t, however, the prices stay above 100 USD/t, resulting from the aftermath of flooding in Hunter Valley. Some producers have not resumed deliveries. Prices for medium-CV material remain under pressure, following low demand from Chinese consumers.
The spread between 5,500 and 6,000 kcal/kg NAR coal has widened to 36 USD/t. Although this gap is not as significant as the spreads that exceeded 100 USD/t during the previous energy crisis, caused by the start of the Russian-Ukrainian conflict, it may push producers to enrich high-ash raw materials in order to sell them at a higher price.
South Korea intends to abandon long-standing tax breaks on energy coal consumption from July 01, which will make imports of low-CV material unprofitable. A single tax (ICT), also known as a carbon tax, of KRW 46,000/t (33.53 USD/t) will apply to all thermal coal regardless of quality.
Previously, a three-tier system was in place: KRW 49,000/t (35.72 USD/t) for coal with a calorific value of 5,500 kcal NAR and above, KRW 46,000/t (33.53 USD/t) for coal with a calorific value of 5,000-5,499 kcal NAR, and KRW 41,000/t (29.89 USD/t) for material with a calorific value of less than 5,000 kcal NAR. All three rates have been reduced by 15% over the past two years.
This means, traditional suppliers of high-CV coal, Australia and Russia, can partially replace the share of low-CV Indonesian material in the Korean market.
The Australian metallurgical coal index HCC slipped below 185 USD/t. The decline in prices for premium Australian material was driven by lower demand from Indian consumers (the country has entered the monsoon season, and therefore, construction activity and demand for steel are falling), as well as an increase in supply from suppliers.
Source: CCA Analysis
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