Last week, thermal coal indices in Europe rallied to over 73 USD/t. Surge in Brent crude oil prices to 63.6 USD/barrel (+0.9 USD/barrel to Mar. 01, 2021), after one of the world’s largest container ships ran aground and blocked the Suez Canal, had a positive impact on coal quotes. Rise in TTF gas indices to 18.9 MWh (+0.7 MWh or +4% to Mar. 07, 2021) amid shortage of gas in the EU after a cold snap in the end of February boosted coal demand of local power plants.
Nevertheless, expected extension of Covid-19 restrictions in Germany, France and Austria, as well as warm weather in some EU countries, may limit further growth in coal indices. Soaring carbon prices to 41.5 EUR/t (+4.4 EUR/t or +12% to Mar.01, 2021) exert additional pressure on coal quotes.
On March 21, 2021, the Polish Minister of environment and climate presented a new energy strategy of Poland until 2040. The document provides for a substantial increase in the share of renewable energy in the power mix of the country from current 10% to 23% by 2030. Wind capacities should reach 5.9 GW. Poland plans to allocate 33.7 billion EUR to create nuclear power capacities of 1-1.6 GW until 2040. Today, 80% of the country’s electricity is produced by coal-fired power plants. Poland remains the only state in the EU that has not committed to becoming carbon neutral by 2050.
Stronger demand from Indian power plants for South African coal strengthened Richards Bay quotes to 100-101 USD/t. Indian market participants are seeking to restock amid a decline in coal reserves at local ports to 14.3 mio t (-3.0 mio t to Feb.01, 2021).
Coal production in South Africa dropped to 248.4 mio t in 2020 (-9.8 mio t or -4% to 2019) due to Covid-19 restrictions, imposed in the country. Richards Bay coal stocks decreased to 2.9 mio t (-0.1 mio t to Mar.17, 2021).
Flooding in Australia prompted the closure of a major coal-haulage railway and cuts in coal production, strengthening Australian coal indices to 103-104 USD/t.
Limited supplies of low-calorific coal due to heavy rainfall in the southern provinces of Indonesia supported Indonesian material prices to 72-73 USD/t.
Supply disruptions at port of Newcastle and suspension of some coking coal mines in Australia amid flooding boosted Australian PCI coal quotes.
Japanese steelmaker Nippon and Australian producer Foxleigh agreed on a PCI benchmark for Q2 2021 at 101 USD/t FOB (unchanged to Q1 2021).
Source: CAA Analytics
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