Over the past week, thermal coal prices in Europe dropped below 175 USD/t. The downward pressure on quotations persists, resulting from reduced coal consumption on the back of record warm weather, as well as high inventories at ARA terminals, strong wind generation and lower gas prices.
Gas contracts at the TTF hub fell to 720 USD/1,000 m3 (-80 USD/1,000 m3 or -10% since the beginning of 2023). Gas intake from EU storage facilities remains low, that is attributed to weaker demand. Currently, European gas storage facilities are 83% full, compared to 50% during the same period last year.
ARA coal stocks slightly decreased to 7.4 mio tons (-0.1 mio t or -2% w-o-w).
South African High-CV 6,000 quotes tumbled below 167 USD/t on limited demand from Europe and India. In 2022, coal shipments through the RBCT terminal decreased to 50.2 mio t (-8.6 mio t or -15% vs 2021), which is the lowest volume for several decades.
In China, spot prices for 5,500 NAR at the port of Qinhuangdao strengthened by 9 USD/t to 179 USD/t, supported by restocking ahead of a sharp cold snap and the Lunar New Year holidays. Temperatures are forecasted to drop by 8-12 degrees in most provinces on January 12-15, and by 20 degrees in some other regions. Moreover, temperatures are expected to fall further to even lower levels, starting from January 18.
Last week, Chinese authorities partially lifted a ban on imports of Australian thermal and coking coal imposed in October 2020. Three state-owned energy companies (China Datang Corp., China Huaneng Group Co., China Energy Investment Corp.) and one steelmaker already received import permits. Southern Guangdong Province also reported receiving government approval for customs clearance of Australian material. In addition, the Chinese government intends to raise the import duty on steam coal up to 6%, that will be effective from April 2023.
In December 2022, China started the construction of 7 large coal-fired power plants with a total capacity of 11.64 GW and approved 4 new projects with a capacity of 6.64 GW. Thus, overall investments in coal power expansion increased by 38% over 2021. China’s total coal-fired generation capacity is projected to hike from last year’s 1,100 GW to 1,330 GW by 2025 and 1,400 GW by 2030.
Indonesian 5,900 GAR weakened to 144 USD/t (-7 USD/t w-o-w), following the decrease in demand and easing of restrictions by Chinese authorities on purchases of Australian coal. At the same time, Indonesian suppliers report growing trading activity from Bangladesh and India, nevertheless the demand price is below the current levels and the tendency is mainly observed in the segment of Low-CV material.
High-CV Australian 6,000 adjusted below 395 USD/t after the previous week’s spike, driven by news on easing of trade constraints between China and Australia.
Australian metallurgical coal indices followed a similar scenario, dropping to the level of 300 USD/t. Currently, Chinese state-owned steelmaker China Baowu Steel Group received a permit to import Australian metallurgical coal. Meanwhile, China raised the coking coal import duty from 0% to 3% (this amendment will come into effect in April 2023).
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