Last week the European market prices strengthened. The indices rose again and settled above the psychological mark of 100 USD/t. Upward movement was supported by traders taking profit during recent fall and taking new positions, which is confirmed by increased trading volumes of paper contracts and liquidity growth at ICE and CME exchanges.
Prices were also backed by news about the repeated shutdown of the Hammerfest LNG plant in Norway, the suspension of production at the Norwegian Norn gas field, the redirection of US LNG from the European market to Asia, as well as a further reduction in Saudi Arabia’s oil production by 1 mio b/d.
ARA stockpiles totaled 7.4 mio t. (-0.28 mio t w-o-w). Inventories slipped due to re-exports to other countries (Morocco, Senegal, India).
South African high-CV coal prices slightly rebounded from last week’s two-year lows, returning to 100 USD/t. Weak demand for South African material comes amid high coal inventories in Europe and India. Indian sponge iron producers remain interested in medium- and low-CV African material.
In China, spot prices for 5,500 NAR at the port of Qinhuangdao NAR coal at the port of Qinhuangdao fell by 5 USD/t to 111 USD/t.
There are mixed sentiments in China’s domestic market. Several rounds of price cuts by Shenhua resulted in discounts offered by other producers. Market participants are reporting large stocks of coal in production warehouses. At the same time, quotes in the ports after a long fall showed a moderate increase over the last couple of days due to the growth of demand for electricity for air-conditioning, as in a number of regions of the country the temperature is expected to rise to 35-37 ˚С.
Coal stocks at QHD port stood at 6.25 mio t (flat w-o-w), and total inventories at 9 major terminals were 29.75 mio t (-0.51 mio t).
While many market participants are signaling overstocking and excessive imports, government agencies are pushing to increase coal and gas supplies, as well as increase the utilization rate of power plants during the peak summer period.
Indonesian coal 5900 kcal/kg GAR dropped to 98.00 USD/t. FOB Kalimantan (-$4.50/t w-o-w). Indonesian material prices remain under pressure amid weak demand from China and India.
High-CV Australian 6,000 material last week fell to nearly 130 USD/t, testing the minimum since June 2021. The decline in quotations is due to the growth of nuclear generation in Japan and a moderately warm season in Northeast Asia.
Prices of LNG competing with high-CV coal with delivery to Japan, Korea and Taiwan remain below 10 USD/mmbtu at 9.20 USD/mmbtu (-0.05 USD/mmbtu w-o-w). An oversupply of imported coal in the Chinese and Indian markets is putting pressure on the price of high ash mid-CV material.
Australian metallurgical coal prices edged higher 228.00 USD/t.
The world’s six largest steel companies (ArcelorMittal, Salzgitter, SSAB, Tata Steel, ThyssenKrupp and US Steel) have announced that their capital spending related to plans to decarbonize the industry will double between 2023 and 2030 compared to spending in 2013-2021. The companies plan to spend a total of 104 billion USD. In particular, they plan to develop renewable energy for steel production (including hydrogen-based), as well as improvements in DRI technology and electric arc furnaces. Global demand for steel with a low carbon footprint is forecast to be 200 mio t by 2030, or 10% of total steel demand. By comparison, demand in 2021 was estimated at 15 mio t.