World coal market: brief overview

by Editor

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Over the past week, thermal coal quotations on the European market climbed above 140 USD/t. Nevertheless, the indices continue to be under pressure from strong wind generation and high stocks at ARA terminals, as well as ongoing downward price trend on the gas market.

Gas prices at the TTF hub fell to 479 USD/1,000 m³ (-8 USD/1,000 m³ w-o-w). Filling level of EU gas reserves is more than 55%. ARA coal inventories slightly decreased to 6.7 mio t (-2% w-o-w).

South African High-CV 6,000 rose above 130 USD/t, rebounding from their 16-month lows, while Medium-CV material prices dropped amid reduced demand from India and Pakistan, which almost completely halted purchases of coal from South Africa.

South Africa’s Canyon Coal, a division of private investment firm Menar Group, announced plans to invest 60 mio USD to develop the Gugulethu Colliery and Thuso projects. Extraction of 5,500 NAR coal at Gugulethu Colliery in amount of 1.2 mio t per year will start in the H2 2023. The material will be exported through Richards Bay Coal Terminal (RBCT).

In China, spot prices for 5,500 NAR at the port of Qinhuangdao went down to 149 USD/t on the back of increased production and low demand.

In March 2023, China produced 417 mio t of coal, while the output in Q1 2023 reached 1.2 billion t (+5.5% vs. Q1 2022) driven by the authorities’ intention to achieve sufficient reserves ahead of the summer period.

Indonesian 5,900 GAR lost 3 USD/t, down to 118 USD/t. After strengthening a week earlier, the index declined on low demand from buyers and weak activity on the Indonesian market in the run-up to the end of Ramadan (April 21).

High-CV Australian 6,000 plunged below 185 USD/t due to lower demand from European and Asian consumers.
Australia’s Glencore and Japan’s Tohoku Electric Power reached a benchmark agreement for the next fiscal year (starting April 01, 2023) at 199.95 USD/t FOB Newcastle 6,322 kcal/kg GAR, resulting in buyers rejecting deals above 200 USD/t on the spot market.

Origin Energy decided to shut down the 2.8 GW Eraring coal-fired power plant by 2025. The plant is located in New South Wales and consumes about 6.0 mio t of coal annually. Its closure will increase the supply on the export market.

Australian metallurgical coal indices went below 230 USD/t, following the adverse conditions on the steel market, falling prices in China, as well as statements of several steelmakers on planned production cuts, caused by low demand in March.

Additional negative news was Coal India’s decision to scale up production of washed metallurgical coal six-fold from 2.2 mio t to 13.5 mio t by 2030, meaning a significant reduction in demand for imported material.

Source: CAA

World coal market: brief overview