Over the past week, the European market saw a strengthening of quotations above 380 USD/t amid rising gas and electricity prices.
Gas prices spiked by 316 USD/t or 22% to 1,743 USD/1,000 m3 over the week after European Commission (EC) President Ursula von der Leyen said the EU should prepare for a potential complete suspension of Russian gas supplies, which will require the EC to present an emergency action plan by July 20, 2022. Also, Germany is concerned that Russia might not resume natural gas deliveries through the Nord Stream 1 pipeline after maintenance work planned for July.
The South African coal index climbed above 350 USD/t. Pakistani power plants asked the authorities to allow resumption of buying South African material as the Ministry of Finance of Afghanistan has decided to more than double the price of coal after the increase in demand from Pakistan. Thus, it is expected that the price of 6000 Afghan coal may reach around 400 USD/t CFR.
In China, spot prices for 5500 NAR increased to 189 USD/t FOB Qinhuangdao. The growth of steam coal quotations in the Chinese domestic market was driven by an increase in temperature, contributing to the reduction of stocks at power plants. In addition, China has suspended customs clearance of Mongolian coal following the discovery of two cases of COVID-19 coronavirus infection in Gantsimaodu city on the border with Mongolia, as a result of which authorities are considering a complete suspension of coal imports by trucks through the largest border crossing Gashuun Sukhait – Gantsimaodu.
Coal inventories at Qinhuangdao port stood at 5.7 mio t (-0.01 mio t w-o-w).
Australian indices were kept at a still high level of about 400 USD/t due to steady demand from Asian buyers. Prices were also supported by unfavorable weather conditions in Australia.
Heavy rains and floods caused the Australian Rail Track Corporation (ARTC) to shut a large part of its Hunter Valley railroad network in New South Wales, limiting coal supplies to Newcastle terminals. The biggest rainfall was at the Port Kembla coal terminal. It remains unclear how long it will take to fix the damage caused by the flooding.
Market participants expect negotiations on the thermal coal benchmark for the fiscal year 2022-2023 between Japanese consumers and Australian suppliers to be finalized on July 15, 2022, while Australian authorities have published a benchmark forecast at 223 USD/t FOB Australia.
Indonesian 5900 GAR was trading at 189 USD/t FOB Kalimantan. Prices for high-CV Indonesian material remain under pressure amid low demand from Chinese and Indian buyers. Low-CV prices strengthened owing to an increase in consumption of a blend of Indonesian low-CV and Russian high-CV coal.
Australian metallurgical coal quotes continue to drop below 260 USD/t as the supply is still well above the demand on the spot market on the back of depressed steel prices and reduced production by steel mills.
Meanwhile Australian Foxleigh and Japanese Nippon Steel agreed on LV PCI benchmark price for Q3 2022 at 249.5 USD/t FOB.