Over the past week, European thermal coal market quotations plunged below the level of 100 USD/t for the first time in the last 2 years. The downtrend persists and pressure on prices continues to be exerted by such factors as an increase in RES generation, favorable temperatures, high ARA’s inventories and falling gas and electricity market indices.
Gas prices at the TTF hub fell to 276 USD/1,000 m3 (-24 USD/1,000 m3 w-o-w). Cumulative LNG arrivals in the EU are at an all-time high, combined with stable pipeline gas supplies.
Coal stocks at ARA terminals decreased slightly to 7.7 mio t (-0.1 mio t w-o-w), remaining at its highest level since September 2022.
South African High-CV 6,000 dropped below 95 USD/t on falling demand in Europe and India.
The uMhlathuze administrative district plans to impose a fee on trucks, transporting coal to the Richards Bay Coal Terminal (RBCT) in order to keep roads in good condition due to the increased workload. This is expected to reduce South African exporters’ margins, and some market participants are predicting a decline in truck shipments of coal to ports in South Africa and Mozambique by 2023 to 8-9 mio t of coal (-7 mio t vs. 2022).
In China, spot prices for 5,500 NAR at the port of Qinhuangdao slashed by 20 USD/t to 115 USD/t, resulting from record stockpiles, reduced demand, strong pace of production and imports.
The China Coal Producers Association and some state-owned coal companies addressed the National Development and Reform Commission (NDRC) to consider regulating import volumes for steam and metallurgical coal following the substantial oversupply. Local companies are also worried that the increase in imports led to volatility and prices dropping in some cases to the production cost level, which could provoke disruption of supplies under domestic contracts. In addition, power plants complain about the lack of improvement in economic activity, forcing them to reduce consumption and shipments. Concerns over large imports are supposed to be voiced again on June 28-29 at a coal conference in Shandong Province.
So far, there has been no official response from the Chinese authorities. Presumably the introduction of restrictions on steam coal imports is not a viable solution, as market quotes are approaching the target range, set by the government last year.
Stocks in Qinhuangdao port climbed to 6.3 mio t (+0.2 mio t w-o-w), while total reserves at 9 major terminals rose to 30.3 mio t (+1.1 mio t w-o-w).
Indonesian 5,900 GAR totaled 103 USD/t (-2 USD/t w-o-w) on the back of weakening spot demand from India and China, where significant growth of stockpiles was observed. Many Indonesian exporters are noticing low bids on the spot market, with the asking price appearing well below sellers’ expectations, given rising production costs and tax burden.
High-CV Australian 6,000 dropped below 135 USD/t under pressure from a combination of negative factors, including weak demand and high stockpiles in Europe and Asia-Pacific countries.
Australian metallurgical coal prices strengthened above 225 USD/t. Metallurgical indices moved sideways, while some suppliers reported the increased demand ahead of expected supply cuts in June as well as restarts of blast furnaces at some plants after maintenance is completed. However, some buyers in China and India are in no hurry to bid in connection with the discussed reduction in metallurgical coke prices on the Chinese market.