World coal market: brief overview

Over the past week, thermal coal prices on the European market firmed sharply to 136-138 USD/t, following rising gas quotations amid fears of supply disruption, resulting from the military conflict in the Middle East.

Gas prices at the TTF hub jumped to 508.8 USD/1,000 m3 (+98.2 USD/1,000 m3 w-o-w) after a temporary production halt at one of Israel’s largest fields (Tamar).

Coal stocks at ARA terminal remained largely unchanged at 7.2 mio t.

South African High-CV 6,000 advanced to the level of 135 USD/t. Paper contracts also gained in price. The quotations upward movement was caused by strengthening of the energy market in Europe, resumption of trade activity in China and steady demand from India and Pakistan.

The South African government decided to postpone the decommissioning of some coal-fired power plants of Eskom until 2023, thus contributing to stable demand in the domestic market and stimulating investments and development of the coal industry. Last year, Eskom accounted for 110 mio t of coal, or nearly 50% of South Africa’s total production.

In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao added 7 USD/t to 144 USD/t. After the end of holidays in China the indices continued to grow on expectations of supply reduction related to stricter safety inspections at local mines. Over the last 10 days, at least 10 incidents occurred in Shanxi province, prompting authorities in several regions to announce that mines with significant safety issues may be completely shut down.

Prices are also being supported by increased activity in consumer industries, including cement, chemicals and steel sectors.

Coal inventories at Qinhuangdao port lowered to 5.2 mio t, down from 5.4 mio t, recorded ahead of the Chinese National Day holiday week.

Indonesian 5,900 GAR climbed to 96 USD/t (+1 USD/t), supported by strong demand from India and China, as well as supply concerns.

More than 100 Indonesian companies may not be permitted to increase their coal production quotas, leaving them with no room to ramp up production until the end of 2023 as they have already run out of their limits. For 8 months of 2023, Indonesia’s coal extraction totaled 514 mio t (+63 mio t or +14% y-o-y). At current production rates, by the end of 2023 the volume may reach 772 mio t in comparison with 695 mio t in 2022.

Nevertheless, some companies are already reporting that they will be forced to suspend production as early as in October. In addition, authorities introduced extra fees for vessel-to-vessel coal transshipment at Muara Berau port, forcing about 20 mining companies to initiate a protest, that could lead to a drop in shipments.

Australian High-CV 6,000 dropped below 140 USD/t, remaining under pressure on the back of subdued demand in the spot market, while prices for Medium-CV material remained firm.

High demand from consumers in India and the Asia-Pacific, along with tight supply, are pushing Australian HCC metallurgical coal prices above 365 USD/t. Some market participants note that delays in shipments reach 30-50 days as vessels queues increase at the Australian port of DBCT.

Quotations are also supported by growing prices in China, where inspections at mines over accidents raised fears of supply cuts.

Source: CAA

World coal market: brief overview