Last week, thermal coal quotations on the European market fell sharply down to 95 USD/t. The indices were under pressure on such factors as a significant reduction in German coal-fired generation, an increase in the share of renewable energy and a drop in gas prices.
Gas prices at the TTF hub fell to 307 USD/1,000 m3 (-73 USD/1,000 m3 w-o-w) as concerns over gas supply eased after Norwegian flows were restored. Meanwhile, gas storage facilities are already 80% full.
South African High-CV 6,000 dipped below 95 USD/t amid reduced demand in Europe, with scheduled maintenance on the rail network failing to support coal quotes.
Inventories at South Africa’s RBCT terminal stood at 3.6 mio t, well below the 5 mio t, considered as the norm ahead of the 10-day maintenance of the North Corridor rail line, which links the Mpumalanga region’s mines to the RBCT terminal. The North Corridor line will be closed for maintenance from July 11 to July 20, with exports through RBCT expected to fall to 3.5 mio t in July (-0.6 mio t by June 2023), before recovering to 5 mio t in August.
In China, spot prices for 5,500 NAR at the port of Qinhuangdao remained flat at 118 USD/t, reflecting higher consumption as well as approaching summer peaks despite high stockpiles. Most coal companies do not expect a significant drop in quotations in the near future, although prices slightly adjusted downward in Inner Mongolia, Shanxi and Shaanxi regions.
Coal consumption at 6 largest coastal thermal power plants increased to 871 kt (+55 kt w-o-w), while their stocks decreased by 0.26 mio t to 14 mio t during the week. Inventories at China’s 9 largest ports totaled 26.1 mio t (+0.1 mio t w-o-w).
China’s state-owned power utility China Southern Power Grid reported that grid load in 5 provinces (Guangdong, Guangxi, Yunnan, Guizhou and Hainan) reached an all-time high of 226 GW, up 3 GW from last year’s record due to increased air-conditioning demand resulting from hot weather. The figure is also forecast to reach 245 GW this summer, indicating a 10% growth in consumption compared to the same period in 2022.
Indonesian 5,900 GAR strengthened to 90 USD/t. High- and Low-CV prices were backed by increased demand from China and India, as well as supply cuts by some Indonesian producers.
Bayan Resources said it expects to produce 45-48 mio t in 2023, up 5-8 mio t, or 12-20%, from 2022 levels, driven by demand in the Asia-Pacific. If the forecast is realized, Bayan Resources will become the fastest growing company in the last 10 years.
High-CV Australian 6,000 plunged below 130 USD/t. Meanwhile, Medium-CV material strengthened on limited supply as well as improved demand from China and India.
Australian metallurgical coal index firmed slightly above 230 USD/t. Nevertheless, supply on the spot market is growing as steel producers reduce demand following the end of the restocking period. In addition, supply is expected to increase further, including the recent commissioning of the new Maxwell mine in New South Wales (with a capacity of up to 3.5 mio t in its first phase), which has already started shipments of metallurgical coal to the Port of Newcastle.
Japanese steelmaker Nippon Steel and Australian coal supplier Foxleigh agreed a price for Q3 2023 LV PCI at 185 USD/t FOB (-47 USD/t vs. Q2 2023).