(CAA Analytics) European coal prices remain stable at around 50 USD/t due to gas prices trending upwards, reduced supply on the Atlantic market and expectations of rise in power generation.
Drop in US LNG exports to Europe resulted in strengthening gas prices, up to 7.064 EURO/MWh (+0.276 EURO/MWh as of July 01, 2020 г.). US and Colombia coal supply cuts had a positive impact on indices.
The Colombian producer Cerrejon lowered its forecast for export volumes in 2020 by 6 mio t to 19.5 mio t. Prodeco still did not resume operations amid pandemic. The expected recovery of coal-fired generation in Europe in Q3 2020 after the decline, caused by the spread of coronavirus, stabilizes coal indices. However, abundant ARA reserves limit the potential for price growth.
Heightened trading activity of Pakistani consumers lifted South African coal indices and outweighed waning demand of Indian buyers, remaining on the sidelines during monsoon season.
The Chinese yuan, soaring to a four-month high against US dollar and surge in local steam coal prices in China amid limited supplies provided support to Australian coal quotes.
Indonesian coal indices go on tumbling with Chinese and Indian bidding activity remaining weak. Indonesian Coal Mining Association called on local producers to reduce output by 50 mio t in H2 2020 to shore up export prices. Given that, total output in 2020 will amount to 480 mio t, which is 136 mio t less than in 2019. However, a number of Indonesian producers question feasibility of that measure as a sharp reduction in output will lead to layoffs, idled mines and interruption of contracts, which are not cost-effective.
Softening coking coal prices on the Chinese domestic market weakened business China’s interest in imported coal and depressed quotes of metallurgical material of Australian origin.
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