Last week, thermal coal quotations on the European market surged above 110 USD/t. Prices were supported by record high temperatures in the region, a decrease in RES generation as well as an improvement in gas prices. In Germany, the share of RES in the country’s energy mix shrank from 71% to 65%, while the share of fossil fuels increased from 29% to 35%. Thermal coal supplies to the EU fell by almost 30% to 386 kt compared to 503 kt a week earlier.
Gas prices at the TTF hub strengthened to 330 USD/1,000 m3 (+31 USD/1,000 m3 w-o-w) due to reduced supply from Norway, with its capacity constrained by infrastructure maintenance.
South African High-CV 6,000 stayed below 90 USD/t. Quotes of high-CV material remain under pressure amid low demand from European consumers. At the same time, the price of medium-CV coal rose significantly on tight supply, related to logistical issues and reduced stocks at the Richards Bay Coal Terminal (RBCT). Meanwhile, the imports by South Korea soared 10-fold to 0.4 mio t in June.
South African rail operator Transnet stated that coal transportation will be limited at 60 mio t until the issue of locomotive traction shortage is resolved. Thus, the company recognized that negotiations with China Railways Rolling Stock Corporation on spare parts supply stalled again.
Glencore produced 8.5 mio t of thermal coal in South Africa in H1 2023 (+0.2 mio t vs. H1 2022), of which the export market accounted for 6.6 mio t (+0.3 mio t), while the share of domestic market totaled 1.9 mio t (-0.1 mio t).
In China, spot prices for 5,500 NAR at the port of Qinhuangdao firmed by 1 USD/t to 122 USD/t. Quotes growth slowed as cooling demand declined on the back of lower temperatures after reaching its peak levels.
Nevertheless, last week the Communist Party of China held a meeting, which set the direction of China’s economic performance for H2 2023 and agreed to further stimulate economic growth, including the support of the construction industry.
The China Electricity Council forecasts a 6-7% hike in electricity consumption in H2 2023. At the end of H1 2022, the growth in power demand amounted to 5%.
Coal stocks at 9 largest ports of China rose marginally to 25.9 mio t (+0.1 mio t w-o-w).
Indonesian 5,900 GAR slid to 88 USD/t, under pressure from weak buying interest from China as well as India, where cooling demand is slowing. In addition, market participants note that Chinese buyers currently consider the price of high-CV Colombian coal more attractive.
High-CV Australian 6,000 climbed above 136 USD/t. At the same time, the spread between bid and ask quotations widened as Australian and Indonesian suppliers are in no rush to cut prices.
Glencore reported a drop in Australian thermal coal production in H1 2023 to 29.9 mio t (-0.7 mio t vs. H1 2022).
Australian metallurgical coal index remained above 235 USD/t on the demand recovery from China and India, where the rainy season is coming to an end.