Over the past week, thermal coal prices on the European market rose above 105 USD/t on expectations of record high temperatures. Nevertheless, such negative factors as coal generation cutbacks, high stockpiles and low gas prices are still in place. The IEA published a forecast for EU electricity demand, expecting it to fall by 3% in H2 2023 and drop to a 20-year low by the end of 2023.
Gas prices at the TTF hub dropped to 299 USD/1,000 m3 (-8 USD/1,000 m3 w-o-w) due to the restoration of pipeline supplies from Norway.
South African High-CV 6,000 went below 90 USD/t on the back of shrinking demand in Europe.
South African operator Transnet will soon reopen the rail line to Mozambique’s Maputo port, which is part of the Northeast Corridor, where a railcar derailment occurred on July 09. The Northeast Corridor rail line accounts for 14% of Transnet’s total traffic.
South African authorities urged companies to temporarily halt coal transportation by trucks because of the kilometers-long traffic jams at Richards Bay, aggravated by the shutdown of the port for several days because of a dusting and increased truck flows.
In China, spot prices for 5,500 NAR at the port of Qinhuangdao strengthened by 3 USD/t to 121 USD/t, that was driven by high consumption caused by record high temperatures and increased demand for air-conditioning, forcing some power plants to replenish stocks. Additional support came from safety inspections, which led to the temporary closure of some underground and open-pit mines in Inner Mongolia and Shanxi regions. Moreover, market participants expect further price hikes and supply constraints, following a special investigation launched after media reports that some companies may be hiding information about accidents at coal production facilities.
Coal stockpiles of 6 major coastal thermal power plants dropped by 0.14 mio t to 13.9 mio t over the week, while in 9 major ports of China coal inventories dipped to 25.8 mio t (-0.31 mio t w-o-w).
Indonesian 5,900 GAR weakened by 1 USD/t to 89 USD/t. Pressure on the indices came from low activity on the spot market and unstable interest from China, as well as India, where demand for air-conditioning is declining.
The Indonesian authorities required local exporters to keep 30% of export earnings in the country’s banks, starting from August 01, for at least 3 months, that will put financial pressure on companies due to reduced cash flows amid falling global prices. As such, traders will presumably be able to seek a discount from minor coal producers.
High-CV Australian 6,000 was holding at 130 USD/t, remaining under pressure, stemming from weak demand by Asian consumers who expect prices to fall further.
Australian metallurgical coal index rose above 235 USD/t on the back of a supply-demand balance recovery.
Indian steelmaker JSW Steel is considering the acquisition of a 20% stake in metallurgical coal producer Teck Resources. At the end of 2Q 2023, Teck Resources’ sales totaled 6.2 mio t (flat to Q1 2023 and -6.3 mio t vs. 2Q 2022).