Over the past week, European coal prices strengthened above 215 USD/t. The indices have been supported by rising gas prices amid forecasts of an upcoming cold weather and temporary restrictions on supplies from Equinor’s field in the Norwegian Sea, force majeure on coal supplies to the Richards Bay terminal in South Africa, as well as a blockade of railway to Puerto Bolivar by former workers of Cerrejon in Colombia.
Spot prices for High-CV South African 6,000 material exceeded 180 USD/t. Transnet announced that on November 18, 2022 it will partially resume traffic on the railway line leading to the Richards Bay terminal, where a train derailed on November 11, 2022 disrupting supplies to the port and the company was forced to declare a force-major. It is scheduled to fully restore the traffic on November 21, 2022. During the accident, coal inventories at the Richards Bay terminal dropped from 3.2 to 1.9 mio t, due to the lack of grades. As a result, the operator has been forced to delay the loading of materials onto vessels, and traders had to postpone their shipments.
On November 15, 2022, two railway trains with iron ore and manganese collided on the border of Mozambique and South Africa. The accident is expected to have a negative impact on the export market of the two countries. In particular, export supplies of coal from South Africa through the Mozambican port of Maputo might suffer.
In Colombia, former employees of Cerrejon (owned by Glencore) blocked the railway tracks on November 8, 2022, leading to Puerto Bolívar export terminal. The blockage led to further depletion of coal stocks at the terminal, as earlier heavy rains have already been producing a negative impact. The main request of 226 people is to rejoin the company. In February 2021, Cerrejon cut its staff as part of a restructuring and cost reduction campaign. The company has been trying to put pressure on the government by stating that the staff had been dismissed in accordance with the legislation and in case the mining stops the country’s budget will be losing USD468,000 per day. However, President Gustavo Petro didn’t allow to use force to disperse protesters.
Factors in the domestic market are confident that the decline in demand will continue faster than the recovery in demand. Most of the mining regions have eased COVID restrictions on production and transport, but this has not led to an increase in consumer activity.
Also, forecasts of an approaching cold snap are not calculated on the mood of buyers. Coal stocks at power plants are located at a comfortable level, sufficient to operate for 18-24 days, coal stocks in inland ports are also growing. As a result, as of November 16, 2022, spot prices for 5500 kcal/kg NAR coal in Qinhuangdao port decreased by an average of 10.65 USD/t. down to 210 USD/t.
Indonesian 5,900 GAR coal prices slumped to 170.00 USD/t.
The Indonesian authorities announced plans to increase coal supplies to the country’s domestic market in 2023 by more than
40 mio t up to 161 mio t, as previously reported, which is due not only to the desire to exclude situations at the beginning of the year, when a ban on the export of material was implemented, but also with three new coal-fired power plants with a total capacity of 5.3 GW at the beginning (they will consume approximately 23 million tons of coal per year) coming online, as well as with the expectation of economic growth after the COVID-19 pandemic.
High-CV Australian 6,000 coal prices recovered above the level of 335 USD/t.
During the second half of the week, coal market received support amid the conflict between trade unions representing the interests of tugboat workers and Svitzer Australia.
The subject of disagreement was the terms of the new agreement between the unions and Svitzer. Switzer was ready to initiate a lockout from November 18,2022, as negotiations have been going in vain for about 3 years now, with union actions hurting the company for a long period of time.
In the event of a negative scenario, ship towing would be limited in 17 busy ports where Svitzer operates, including Newcastle and Kembla coal terminals.
However, on November 17, 2022, the Fair Work Commission has ordered Svitzer Australia to scrap its planned lockout of tugboat workers, because it would cause significant damage to the Australian economy.
Australian metallurgical coal indices fell below 285 USD/t. Prices for metallurgical coal have been under pressure owing to a weak demand from metallurgical industries in Europe and Asia. In Europe, ArcelorMittal will shut down 2 blast furnaces at its Fos-sur-Mer plant in France from December amid low demand. In Asia, the Vietnamese company Hoa Phat has shut down 5 out of 7 blast furnaces at two of its smelters. As a result, several vessels carrying metallurgical coal may end up on the spot market. According to market participants, there are also other steel companies returning excess metallurgical coal to the market. Indian steel producers show less interest in purchasing material against the backdrop of high stocks of steel and metallurgical coal in the country.
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