World coal market: brief overview

Last week, thermal coal prices on the European market kept growing above 127 USD/t. Quotes were supported by a reduction in stockpiles, as well as high gas prices caused by the strike at Chevron LNG company in Australia.

However, by the end of this week, it was reported that Chevron’s workers have virtually stopped protesting, as the unions had managed to resolve the labor dispute with the company’s officials, who are currently working to finalize a draft agreement. Thus, next week may deliver some price correction, given that the strike was one of the supportive factors in the energy market this September.

Gas prices at the TTF hub adjusted to 413 USD/1,000 m³ (-8 USD/1,000 m³ w-o-w) on higher supplies of Norwegian gas.

Coal stocks at ARA terminals decreased by 1% to 7.1 mio t (-0.1 mio t w-o-w).

South African High-CV 6,000 surged above 130 USD/t, driven by a firming EU energy market as well as increased demand from India, where Coal India workers are scheduled to strike on October 5-7. The expected decline in exports from South Africa in September is also adding some support to indices.

In China, spot prices for 5,500 NAR at the port of Qinhuangdao soared to 135 USD/t. The upward trend was fueled by production cuts in several provinces as a result of temporary capacity shutdowns after the fatal accident, as well as fears of reduced supply on the spot market, stemming from the planned maintenance on the Daqin railroad line in October and stricter safety inspections in mining regions. There was also an increase in demand from market participants, trying to replenish stocks ahead of the Asian Games on September 23 and National Day Holiday in October.

The National Development and Reform Commission of China (NDRC) held an urgent meeting with energy and mining companies on September 19 to assess current market conditions. Recent safety inspections led to a drop in supply, resulting in a 20% shortfall in Shanghai power plant inventories, while electricity demand from the industrial sector was on the rise. Power plant officials also pointed out that coal quality deteriorated in recent months. However, the NDRC is in no hurry to take any actions yet.

Shaanxi Province reported a total suspension of production at 22 mines/open-pit mines with a combined capacity of 23.3 mio t per year after a fatal accident on September 18. Inner Mongolia Province authorities, where 30 mining enterprises have already been halted, said it planned to conduct safety inspections at 80 mines, starting from September 25.

Indonesian 5,900 GAR rallied to 91 USD/t (+3 USD/t w-o-w) due to tight supply as well as strong demand from China and India. At the same time, some suppliers are withholding stocks in anticipation of further growth of quotations. Indonesian authorities are delaying the approval of production plans, revised upwards by several companies, raising fears of supply cuts as those coal producers will have to bring down output in the coming months if there is no agreement by the end of September.

Australian High-CV 6,000 is holding above the 160 USD/t level amid strong demand from India, China, South Korea and other Asia-Pacific countries.

Australian metallurgical HCC coal prices extended gains above 320 USD/t owing to limited supply and steady demand from consumers in Asia and India. The Australian regulator suspended haulage operations at BHP’s Peak Downs metallurgical coal mine to investigate the loss of control of several dump trucks.

Source: CAA

World coal market: brief overview

Coal exports are profitable for all but coal companies