Over the past week, European thermal coal quotations struggled to find a direction, having strengthened above 135 USD/t. In the first half of the week, the indices were supported by news on issues with the Penly nuclear reactor in France, trade unions strikes, which led to delays of barges on the Rhine, as well as a decline in coal exports from Colombia.
Thereafter, falling gas and oil quotes began to put pressure on prices amid instability in the U.S. and EU banking sector.
Coal stocks at ARA terminals haven’t changed much since the previous week, totaling 6.7 mio t.
Dynamics of South African High-CV 6,000 indices mirrored the performance of the European market. Eventually, the quotations managed to consolidate at the level of above 130 USD/t.
Indian sponge iron producers are negotiating for supplies of South African material 5,500 and 4,800 NAR in March-April. Nevertheless, deals are being restrained by a bid-ask spread of about 5 USD/t.
In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao rose by 3 USD/t to 164 USD/t. At the same time, some consumers put forward the opinion that coal production growth, related to the cancellation of restrictions after the National Congress, combined with the seasonal decline in demand, may lead to an oversupply, despite the increase in consumption from the non-power sector.
The quotes could be supported by higher demand from the cement industry (which accounts for about 6-7% of steam coal intake), as well as the upcoming maintenance on the Daqin railway line, scheduled between April 06 and May 05.
Following the lifting of the ban on Australian coal imports, an increasing number of Chinese consumers signed contracts with Australian companies for the supply of 5,500 NAR material in March-June. Trading companies state that Chinese consumers have booked 4 mio t of coal since February 2023. Experts say at least 10 mio t could be delivered by the end of 2023.
Indonesian 5,900 GAR lowered to 121 USD/t (-4 USD/t w-o-w). However, prices may strengthen as Chinese and Indian consumers have started restocking ahead of Ramadan (March 22-April 21), when exports from Indonesia are set to slow down. Indian customers are mainly focusing on the Medium CV material, which they use for blending.
High-CV Australian 6,000 dropped below 170 USD/t as Chinese consumers are currently showing interest in 5,500 coal. Deals for April shipments are running at 120-125 USD/t, with Capesize vessel freight rates on the Newcastle-Zhoushan route rising to 13-15 USD/t within the week.
Thus, Australian 5,500 material with the delivery to China is priced at 133-140 USD/t CFR, which is about 30 USD/t cheaper than FOB Qinhuangdao quotations.
Australian metallurgical coal indices plunged below 350 USD/t on market participants’ fears of lower demand on the back of the worsening global macroeconomic outlook.