Last week, thermal coal prices on the European market rose significantly above 115 USD/t. Quotes were supported by a sharp rise in gas and electricity indices.
Gas quotations at the TTF hub surged by 37% to 449 USD/1,000 m3 (+123 USD/1,000 m3 w-o-w). The sharp growth of gas prices was caused by reports about the planned strike of Australian workers employed in the gas industry, as Australia is one of the world’s largest LNG suppliers.
South African High-CV 6,000 climbed above 110 USD/t on the back of a rising European market and improved demand from Indian sponge iron producers.
This year, South African exports via local coal terminals (excluding RBCT) could break last year’s record despite falling prices, rail restrictions and high transportation costs. In January-July, shipments totaled 13.7 mio t, assuming a year-end figure of 23.6 mio t. With shipments through RBCT likely to be around 50 mio t, South Africa’s cumulative exports may well exceed 70 mio t compared to 71.5 mio t in 2022, of which 21 mio t was shipped through alternative terminals.
In China, spot prices for 5,500 NAR at the port of Qinhuangdao moved down by 2 USD/t to 118 USD/t on weaker coal consumption, higher hydro generation rates and a drop in cooling demand following lower temperatures. In addition, Shenhua Energy reduced purchase prices of third-party material, resulting from decreased costs in mining regions.
China Energy, one of the largest importers of thermal coal in China, is cutting its presence in the spot market and may focus on domestic coal consumption and material imported under long-term contracts by the end of Q3 2023. This initiative may impact spot Indonesian supply by 1 mio t.
Indonesian 5,900 GAR dropped to 88 USD/t (-3 USD/t w-o-w). The downward movement was attributed to lower demand in China and India, which saw an increase in domestic supply and deliveries from Coal India. Meanwhile, prices have so far failed to be supported by reports of delayed shipments from Central and East Kalimantan, where dry weather hampered the work of dozens of companies performing transshipment at river ports.
Indonesia’s meteorological agency predicts the El Nino-induced drought will intensify until at least November.
High-CV Australian 6,000 broke through 140 USD/t level and neared 145 USD/t. For three months in a row from April through June, China remained the main importer of Australian coal. In June, shipments to Chinese consumers increased by 29% to 6.4 mio t. At the end of H1 2023, deliveries of thermal coal to China totaled 21.1 mio t, while supplies to Japan amounted to 33.9 mio t (-6.4 mio t or -19% vs. H1 2022).
Australian metallurgical coal prices consolidated above 245 USD/t, supported by the recovery of demand from China and India, where the rainy season is coming to an end. However, increased supply and limited demand continue to put pressure on Low Vol PCI material.