European coal prices kept strengthening over the past week, reaching 58 USD/t as of November 27. Global energy and financial markets were supported by news on new vaccines against coronavirus. The onset of seasonal cold spell in Europe, as well as further reduction of ARA coal reserves to 5.6 mio t gave additional support to indices.
The European Commission approved a competitive tender mechanism on shutdown of coal-fired TPPs in Germany prior to set dates. First trading sessions for shutting down 4 GW of coal-fired capacities were conducted last summer, the winner will be announced before December 2020, whereas shutting down of TPPs will take place throughout 2021. The tenders are planned to be held up to 2027.
South African price for high-CV coal edged up sharply by the end of week to more than 82 USD/t. Richards Bay FOB indices were supported by soaring demand from Chinese enterprises, which try to offset the shortage of Australian material. Besides, coal reserves at Richards Bay terminal dropped from 4.5 mio t to 3.8 mio t.
The Chinese government may issue additional coal import quotas for remainder of 2020 in the amount of 20-30 mio t. According to market participants, the decision on lifting the restrictions was made in order to avoid shortage of material in winter, as well as to steady prices in the domestic market. However, it remains unclear whether the announced figures include coal loaded vessels, expecting custom clearance at the ports.
NDRC plans to issue quotas for energy enterprises next week. However, many companies have already entered the spot market in order to purchase coal batches with near-term delivery.
Within 10 months 2020, China imported 253.2 mio t coal, which is 8.3% less than in the same period last year. In 2019 the country imported 299.7 mio t.
Demand for Indonesian coal from Chinese consumers rose sharply over the past week in anticipation of new quotas.
The prices for Australian medium-CV coal were supported by steady demand from Indian consumers and strengthening of South African material indices of the similar quality. Besides, a damaged shiploader at the port of Newcastle following severe storms resulted in lower loading.
According to forecasts announced at the online conference Coaltrans Asia, seaborne exports of thermal coal in 2020 will amount to 925.0 mio t (1 040.0 mio t in 2019), in 2021 it will grow by 3.8% (35.0 mio t) to 960.0 mio t. Global exports within 10 months of 2020 dropped to 804.0 mio t (938.0 mio t in 2019).
Source: CAA Analysis
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