Thermal coal prices on the European market strengthened last week, standing above 125 USD/t. Nevertheless, quotations remain under pressure, following the decline in coal consumption, increase in renewable energy generation (RES) and normalized weather conditions. The TTF hub gas indices fell to 380/1,000 m3 (-45 USD/1,000 m3 w-o-w).
South African High-CV 6,000 moved slightly above the level of 100 USD/t. The current weak demand for South African material in Europe is hindering prices even though coal inventories at the Richards Bay Coal Terminal (RBCT) remain at historically low levels of less than 4 mio t. Upcoming maintenance on the Transnet railway line, scheduled for July 11-20, may lead to further reductions in coal stocks.
Pakistani cement producers, after a long break, caused by the country’s economic crisis, resumed purchases of South African Medium-CV coal, providing support for quotations. Since April the volume of deliveries has been running at about 130 thousand t/month. In 2022, the country imported 3.7 mio t of coal from South Africa (-8.4 mio t vs. 2021).
South Africa’s Exxaro Resources stated its production and sales decreased by 4% and 7%, respectively, in H1 2023. This negative trend is stemming from lower domestic demand and limited rail capacity on routes to export terminals. The company’s average export price for 6 months of 2023 amounted to 127 USD/t (-52% vs. H1 2022).
In China, spot prices for 5,500 NAR at the port of Qinhuangdao dropped by 2 USD/t to 112 USD/t amid strong import and domestic production growth, as well as lower consumption at power plants and a traditional Chinese holiday – the Dragon Boat Festival (June 22-24).
According to China’s National Development and Reform Commission (NDRC), total coal reserves at the country’s power plants stand at 190 mio t and will soon reach the target of 200 mio t (an increase of 30 mio t over July 2022). The regulator called for continued ramping up domestic supply and also warned that hydro generation in southeastern provinces will be lower than expected. Despite producers’ concerns about a possible oversupply, the government is still taking action to avoid energy rationing, which had to be introduced last year.
The China Coal Industry Association told market participants it will keep pushing the initiative to limit imports. During a private meeting with coal producers, the association said that at the end of the year, imports are likely to exceed 400 mio t while domestic production may increase by 100 mio t, with demand growth failing to keep pace with supply.
Indonesian 5,900 GAR plunged to 88 USD/t (-3.5 USD/t), caused by weak demand from Indian consumers awaiting confirmation that prices have bottomed out. Indonesian coal production surged to 304.1 mio t in Jan-May this year (+41.2 mio t or +16% vs. Jan-May 2022).
High-CV Australian 6,000 spiked above 135 USD/t. New South Wales state authorities brought up the issue of increasing mining taxes to replenish the budget, which is to be reviewed by September 2023.
Australian metallurgical coal quotes strengthened above 235 USD/t, driven by favorable situation on the steel market, where there was a rise in prices for metallurgical production. Indices were also supported by restocking by in Southeast Asia.