Over the past week, thermal coal indices on the European market rose above 305 USD/t amid statements about possible European ban on coal imports from Russia.
Head of the European Commission Ursula von der Leyen said on April 05, 2022, that a possible package of EU sanctions against Russia would include a ban on the import of coal. On April 06, the UK announced that by the end of 2022 it will completely end its dependence on Russian coal, oil and gas. Also, according to Reuters, the European Commission on April 07, 2022, intends to approve a ban on imports of Russian coal. As a result of pressure from Germany, which demanded a postponement of this measure, the ban could take effect in mid-August, a month later than previously proposed.
At the same time, following the results of 2021, many European countries lifted coal imports from Russia. Germany imported 20.3 mio t (+5.8 mio t or +40% y-o-y), Italy 5.9 mio t (+1.1 mio t or +23%), France
2.9 mio t (+0.64 mio t or +28%), UK 1.75 mio t (+0.36 mio t or +26%). In 2021, European imports, including the UK and non-EU Balkan countries, amounted to more than 50 mio t of coal from Russia, or about 46% of total imports. Coal stocks at ARA terminals totaled 3.50 mio t (+0.3 mio tons w-o-w).
South African material prices surged above 290 USD/t amid international coal market tensions and increased demand from European countries, trying to replace Russian coal supplies. In March 2022, South African exports to the EU amounted to about
0.87 mio t. (+0.7 mio t to March 2021 and +0.65 mio t to February 2022). South Africa’s total coal exports to the EU in Q1 2022 increased to 1.2 mio t (+383% y-o-y).
In China, spot prices for 5500 NAR fell by almost $23 USD/t to 204 USD/t FOB Qinhuangdao. Quotes of thermal coal in the domestic market of China also declined last week. The loading factor of power plants in China fell to 60% against the background of the spread of COVID-19. Energy companies were in no hurry to increase inventories, expecting that the cost of purchasing domestic material will fall sharply from May 01, 2022, when the new pricing mechanism for steam coal will be introduced, which, according to experts, may lead to a decrease in spot prices by another 31-47 USD/t compared to the current level.
The increased trading activity of European consumers had a positive effect on the indexes of Australian material above 290 USD/t, driven by a possible ban on of Russian coal imports.
Indices of Indonesian material continue to fall to 195 USD/t following reduced trading activity of Chinese buyers, owing to the spread of COVID-19 in China.
Australian metallurgical coal prices dropped further to 395 USD/t amid an increase in export shipments from Australia.