Last week, thermal coal indices in the EU edged higher above 75 USD/t. Positive sentiment on the coal market stemmed from surging TTF gas prices to 21.8 EUR/MWh (+2.6 EUR/MWh to April 14, 2021). Gazprom, one of the key European gas market players, announced its plans to reduce gas exports in May 2021. In addition, decrease in wind output in a number of European countries to 808 GWh (-98 GWh to April 21, 2021) provided additional support to coal quotes. However, higher carbon prices (44.4 EUR/t) may deter further strengthening of coal indices.
Disruption of coal supplies on the railway line, connecting the coal provinces of South Africa and the port of Richards Bay had a positive impact on the South African coal prices, boosting them to the range of 94-95 USD/t. On April 27, 2021, train derailment blocked the traffic. Limited coal exports from South Africa stabilized the indices despite weaker demand from Indian companies amid Covid-19 outbreak in the country. Richards Bay coal stocks amounted to 3.2 mio t (-0.3 mio t to April 21, 2021).
Lowering demand from generating companies in the Asia-Pacific region pressured Australian thermal coal quotes below 90 USD/t. Some market participants prefer buying Indonesian coal at a discount from Indian traders amid the deteriorating epidemiological situation in the country.
On April 25, 2021, the Chinese National Development and Reform Commission announced its plans to intensify cooperation with the central customs authorities in order to lessen coal import limitations. This measure is aimed at preventing a shortage of coal supply on the domestic market during summer, when there is a seasonal increase in demand for electricity. Earlier, Xinsha coal port reported that the volume of imported coal is approaching the cap, established by the government. The Committee also unveiled a plan to set up a group to develop measures in order to increase coal production in key mining provinces.
On April 22, 2021 during the climate summit, organized by the United States, the Chinese President Xi Jinping said that China would begin phasing out coal from 2026. Some countries participating in the summit were disappointed by this statement, given that Chinese economy accounts for about 30% of all CO2 emissions in the world. In 2020, Xi Jinping promised to make China’s economy carbon-neutral by 2060.
Continuing rains in the southern provinces of Indonesia limit the supply of export coal and support the Indonesian 5900 GAR coal quotes higher 85 USD/t.
The growth in the supply of coking coal from Canada and the United States to the Asia-Pacific markets reduces the demand for Australian metallurgical coal, lowering prices of coking coal from Australia below 110 USD/t.
Source: CAA Analytics
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