(CAA Analytics) European coal indices have stabilized at around 50 USD/t due to rising gas quotes, EU carbon prices edging lower and export supply cuts on part of US and Colombian producers.
TTF natural gas prices strengthened up to 4.91 EURO/MWh (+0.259 EURO/MWh to July 22, 2020). EU emission costs dipped to 25.69 EURO/t (-0.88 EURO/t to July 22, 2020). In June 2020, US export coal volumes dropped by 50% to 3.33 mio t on the year amid falling coal prices on the Atlantic market.
In August, Colombian mining regulator is expected to decide on 4-year suspension of operations at Prodeco’s mines owing to the need of maintenance. However, local unions argue that the upcoming regulator’s decision could be taken due to weakening global coal indices, which make Prodeco’s production unprofitable. Abundant coal reserves of 6.73 mio t (unchanged to 22 July 2020) at ARA terminals, as well as reduced energy consumption in the EU, are limiting the upside potential for coal prices.
Indian government re-imposed restrictions in several states due to the surge of Covid-19 cases, idling a number of metallurgical and cement enterprises and depressing South African coal quotes. Nevertheless, Indian trade unions called for a strike next month that may lead to a reduction in local coal supplies, spurring demand for imported material. Indian trade unions stand against the governmental policy of privatizing the national coal industry and high level of foreign direct investment in the national coal mining business.
Abundant local coal supplies in the Chinese market, falling demand of Japanese generating companies due to concerns regarding a second wave of Covid-19, as well as a lack of clarity on easing import controls on part of Chinese consumers put pressure on quotes of Australian material.
Indonesian imported coal indices inched higher as a result of reduced supplies on the international market and stronger demand of Chinese coal-fired power plants for imported low calorific material amid heavy rains in the North-West of China.
Waning demand of Chinese metallurgical enterprises for Australian coking coal, caused by the exhaustion of customs quotas in the ports of China and Covid-19 crisis, taking a toll on steel sales, negatively affected prices of metallurgical material of Australian origin.
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