Last week European thermal coal prices dropped sharply below 140 USD/t. A number of factors, including upward revision of the temperature forecast, steadily high coal inventories at ARA terminals, softening gas prices, as well as the expected strong rise in wind generation put heavy pressure on the quotes.
The indices collapse was also attributed to the financial contracts sell-off within a single trading session by large market participants, who previously held long positions. Gas contracts on the TTF hub fell to 640 USD/1,000 m3 (-70 USD/1,000 m3 or -10% w-o-w) on the back of sustained supplies and more than 77% full gas storage capacities in the EU.
South African High-CV 6,000 quotations tumbled below 137 USD/t amid continued downward movement of European indices. An additional negative factor was the 40% reduction of steam coal imports by Pakistan, where coal generation decreased by 13% in 2022 following the worsening economic situation in the country.
In China, spot prices for 5,500 NAR in the port of Qinhuangdao stayed flat at 180 USD/t. The holidays on the Chinese market will last from January 21 to 27 for the New Year celebration according to the lunar calendar. Based on 2022 results, Chinese thermal coal imports declined to 219 mio t (-41 mio t or -16% y-o-y), resulting from an increase in domestic production and low economic activity, caused by the government’s zero-Covid policy conducted during the last year.
Indonesian 5,900 GAR adjusted down by 1 USD/t to 143 USD/t on low trading activity, linked to Chinese New Year holidays. Other consumers also took a wait-and-see approach, assuming further price reduction, given the downtrend and forecasted recession in the global economy.
High-CV Australian 6,000 plunged below 305 USD/t amid high stocks of steam coal in the Asia-Pacific and the onset of the New Year holidays in China. Australian 5,500, holding at 130 USD/t, was supported by improved activity of Indian buyers. In addition, Australian coal shipments dropped 41% last week from 6.4 mio t to 3.8 mio t (the lowest weekly volume since early October 2022). This negative trend was caused by the impact of the Tropical Cyclone Ellie on the loading operations at several Queensland export terminals (Abbot Point, Hay Point and Dalrymple Bay) as well as the suspension of rail shipments.
Australian metallurgical coal indices climbed to 330 USD/t, driven by the limited supply on the spot market, lower production and reduced shipments of Australian material as a consequence of the cyclone.
Coronado Global Resources, which produces metallurgical coal, reported a decrease in production volumes, based on the results of 2022, to 16 mio t (-7% y-o-y), which was 1 mio t lower than forecasted and was associated with adverse weather conditions in the state of Queensland. Bowen Coking Coal (BCC) announced on January 20, 2023, that the Dalrymple Bay terminal had declared force majeure because of Cyclone Ellie. Some customers expect delivery dates to be delayed by at least two weeks.
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