The downtrend on the European thermal coal market continued last week. The pressure on prices, which fell below 115 USD/t, is still caused by such factors as an increase in RES generation, high stocks at ARA terminals and declining gas and electricity quotations.
As of last week, the RES share in Germany’s energy mix reached 67%, up 6% (last year’s RES share was 56% in the same period).
Gas quotes on the TTF hub dropped to 354 USD/1,000 m3 (-40 USD/1,000 m3 w-o-w), reaching May 2021 lows. European gas storages are 64% full and inventories are still growing, owing to the stable pipeline gas and LNG supplies. Meanwhile, EU countries started to discuss a ban on LNG imports from Russia.
South African High-CV 6,000 moved below 105 USD/t amid low demand in Europe and improved rail shipments in South Africa.
South African rail operator Transnet reported it had fixed the consequences of railcars derailment on the Northern Corridor (on May 11, 2023) between two districts, Dumbe and Vryheid, causing the closure of one of the rail lines leading to Richards Bay Coal Terminal (RBCT). The Northern Corridor was scheduled to resume full operations on May 17. As a result of the incident, shipments were temporarily redirected along the route previously used for returning empty wagons, so the event had no effect on the quotations.
In China, spot prices for 5,500 NAR at the port of Qinhuangdao decreased by 1 USD/t to 142 USD/t, following record inventories at consumers’ stockpiles, reduced demand, and high production volumes. Some mines in Inner Mongolia province resumed production after restrictions related to safety checks.
Shenhua Energy and ChinaCoal Energy reported a drop in April coal sales, resulting from lower demand and increased imports. Shenhua’s sales volume was 36.6 mio t (-7% vs. March 2023), while ChinaCoal’s performance dipped to 25.4 mio t (-12% vs. March 2023).
Coal stocks at the Qinhuangdao port rose to 28 mio t (+0.3 mio t w-o-w), while total reserves at 9 major terminals climbed up to 6 mio t (+0.3 mio t w-o-w).
Indonesian 5,900 GAR lost 5 USD/t to 113 USD/t, given the weakening demand from China and India. Market participants also point out a significant spread between the bid and ask prices.
Last week the Indonesian authorities considerably lowered the domestic steam coal index HBA for May 2023. Thus, HBA 6,322 GAR amounted to 206.2 USD/t against 265.3 USD/t a month earlier (-22% m-o-m). HBA 4,200 GAR reduced to 82.2 USD/t against 87.8 USD/t (-6.4% m-o-m).
High-CV Australian 6,000 plunged below 160 USD/t under pressure from a mix of negative factors, including high stocks in Europe and Asia-Pacific.
Australian coal producers are in a dispute with the authorities over the country’s new regulations on CO2 emissions, starting from July 01, that could result in fines and higher production costs for some companies, as the authorities insist on a standardized approach, with no regard to mining method or type of coal.
Australian metallurgical coal prices sank below 230 USD/t on the back of a significant surplus of supply over demand. Chinese steel market remains under pressure, while Indian buyers take a wait-and-see approach as they forecast a drop in FOB quotations, which may follow CFR China indices.
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