Over the past week, European thermal coal market quotations dropped further below 240 USD/t on the back of lower gas and electricity prices, resulting from reports on 95% full gas storage capacities, which are exceeding demand, amid dozens of LNG tankers piling up at European ports. The energy market also continues to be under pressure because of a projected cap on gas prices and a later heating season, caused by warm weather in some parts of Europe. The TTF hub gas indices fell to 1,033 USD/1,000 m3 (-167 USD/1,000 m3 or -14% w-o-w), while on the spot market at some point the prices were dipping to negative numbers.
The European Commission keeps pushing ahead with plans to cap gas quotes and is considering the introduction of a dynamic price ceiling on the TTF hub to reduce volatility. The implementation of these measures was discussed at a meeting of EU energy ministers on October 25, however, participants could not reach a consensus and will return to the deliberation on November 24.
High-CV South African 6,000 coal plunged below 215 USD/t, following the end of the strike by SATAWU and UNTU trade unions, as well as ongoing lower demand from India and Pakistan, which are increasing consumption of more competitive Russian and Mozambican material.
The SATAWU union announced that the strike, which has been lasting for 2 weeks, would be stopped, nevertheless negotiations on wage increases should continue. Thus, all Transnet employees are expected to resume their work on October 26, bringing railway and port infrastructure operations fully back to normal. Therefore, Transnet withdrew the previously announced force majeure, resulting in an increase in deliveries since the termination of the strikes, according to statistics of the South African Association of Freight Forwarders (SAAFF).
In China, spot prices for 5,500 NAR at the port of Qinhuangdao surged by 5 USD/t to 229 USD/t. Quotations on the Chinese domestic market carry on strengthening on supply constraints and quarantine measures in the Jungar Banner mining region in Western Inner Mongolia province, caused by the spread of COVID-19, which led to a sharp reduction in coal shipments to Eastern China, including Hebei and Shandong provinces. The closure of Jungar Banner with annual production of 352 mio t as well as the limited capacity of the Daqin railway line, which maintenance was extended for another week to October 29, are providing significant support to coal indices.
Indonesian 5,900 GAR adjusted to 188 USD/t due to low consumer activity in India, where the national festival of lights (Diwali) is celebrated from October 22 to 26. Low-CV coal prices declined less, reflecting a shift in demand to this segment of the market.
Over January-September 2022, coal extraction in Indonesia reached 509 mio t (+50 mio t or +11% y-o-y). However, coal mining companies pointed out that it would be hard to maintain the current production rate in Q4 2022 because of the increased rainfalls in October.
Australian High-CV 6,000 prices slipped below 380 USD/t as RG Tanna’s 60 mtpy terminal in Queensland resumed operations after a conveyor belt failure caused by heavy rains on October 19-20.
Australian metallurgical coal indexes climbed above 305 USD/t on fears of supply constraints, linked to a Queensland BHP’s labour strike, which was voted by an overwhelming majority amid ongoing adverse weather conditions.
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