European coal market showed mostly negative trend last week, bringing quotations below 135 USD/t. Among factors that put pressure on prices: uncertainty in the global financial sector, falling gas and electricity indices, as well as forecasts of stable wind generation and temperatures above the average seasonal levels. Market participants attributed the short-term rebound in quotes by almost 10 USD/t on Tuesday, March 21, to easing of fears over the US banking crisis, as well as the bidding activity in Turkey and Morocco.
Coal stocks at ARA terminals increased by 8% to 7.2 mio t.
South African High-CV 6,000 sank below the level of 130 USD/t. According to market participants, no price growth for South African material is expected in the short term. The reduction in supply of High-CV coal is compensated by low demand from European consumers, who have accumulated sufficient inventories. Indian sponge iron producers await further weakening of quotations for Medium-CV 5,500 to 95-100 USD/t from current levels of 110-115 USD/t. So far, new deals are put on hold as previously booked shipments allow to cover consumption needs until May.
In China, spot quotations for 5,500 NAR coal at the port of Qinhuangdao lost 3 USD/t, dropping to 161 USD/t amid low demand and sufficient supply. Many producers are lowering prices, following the rise in coal production that occurred after the completion of the National Congress and the lifting of restrictions.
Indonesian 5,900 GAR amounted to 119 USD/t (-1.5 USD/t w-o-w). The activity on the market of Indonesian coal is decreasing. On the one hand, it is associated with the beginning of the month of Ramadan (March 22-April 21), on the other hand, the Chinese consumers are cutting back on purchases or even canceling tenders, citing high prices. Demand from India remains stable.
High-CV Australian 6,000 climbed above 175 USD/t amid forthcoming negotiations between Glencore and Japanese energy company Tohoku Electric on the benchmark for the next fiscal year, starting April 01. According to market participants, Glencore’s initial offer may be at 250 USD/t, Japanese consumers are likely to be guided by current spot quotes of around 180 USD/t FOB.
Continued drop in Australian metallurgical coal indices below 340 USD/t was linked by some experts to the abundant supply. Chinese consumers took a wait-and-see attitude on the back of lower prices and the growth in production on the domestic market.