(CAA Analytics) World coal market: brief overview – week 28
Surge in trading activity in the paper market, the expected recovery of pre-crisis EU power demand and strengthening gas quotes drove coal prices up in Europe this week. The projected growth in the average level of power demand of the 10 largest EU countries during Q3 2020 had a positive impact on European energy prices and coal indices. According to the analytical platform Gas Infrastructure Europe, the supply of liquefied natural gas to the European market in June 2020 decreased by 11% year-on-year, shoring up gas quotes. However, steam coal indices in Europe remain under pressure from abundant ARA coal reserves.
Amid monsoon season, Indian consumers began booking September supplies of high calorific coal from South Africa, boosting South African steam coal indices. However, due to increased freight rates and falling steel prices, Indian metallurgical companies refrained from purchases of mid-calorific material, weakening quotes of mid-calorific coal.
Low demand from Chinese consumers during public holidays in China (June 25-27) as well as import controls in the ports of Jiangsu and Guangdong provinces affected negatively the Australian coal price. Nevertheless, activity in the paper market is supporting index at the current level.
Sluggish Chinese and Indian demand depress quotes of imported coal from Indonesia. Attempting to reverse downward trend of material prices, Indonesian producers reduced supplies in H1 2020 by 37% year-on-year.
The limited supply of local coking material in China due to government safety checks at mines in Shanxi province and the exhaustion of quotas for imported metallurgical coal from Australia stabilized Australian coking coal indices.
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