Thermal coal indices in the EU continued to strengthen, exceeding 85 USD/t, amid surging prices for natural gas and electricity. TTF gas prices spiked to 26.2 EUR/MWh (+1.4 EUR/MWh to May 05, 2021). EU carbon prices climbed to over 54 EUR/t, which is the highest figure since the introduction of this instrument to the stock exchange in 2005. ARA coal stocks amounted to 4.5 mio t (+0.2 mio t or +4% to May 05, 2021).
Within last week South African coal indices were in the range of 102-105 USD/t, reaching new highs since October 2018. On May 06, 2021, South African operator Transnet resumed coal shipments by rail from local coal provinces to the port of Richards Bay, while announcing the planned closure of the railway line for maintenance from 13 to 23 July 2021. Richards Bay coal stocks amounted to 3.0 mio t (-0.1 mio t to May 05, 2021).
Nevertheless, the imposed lockdowns and restrictions in India amid a new wave of the Covid-19 pandemic in the country may lead to a decrease in Indian coal imports and become an obstacle to further growth in indices of South African material. A number of ports in India has already announced force majeure, while some Indian states have started to impose severe quarantine measures.
Prices for Chinese local material 5,500 NAR Qinhuangdao skyrocketed to 140 USD/t in the domestic market of China. The sharp upturn in indices was driven by increased demand for electricity and restrictions on coal mining in the regions due to recent accidents at mines and Chinese directives aimed at protecting the environment.
However, the recent announcement by the Chinese government, calling for containment and stabilization of soaring commodity prices, has negatively affected the prices of futures, including iron ore and coking coal, and may dampen market sentiment, limiting the growth of global coal indices in the short to medium term. In addition, some market participants switched to a wait-and-see mode, expecting a correction in prices, hitting two-year highs.
Quotes of high-calorific Australian coal approached 100 USD/t, being supported by higher indices of South African Richards Bay material amid increased trading activity by Korean and Taiwanese consumers.
The increased demand of Chinese generating companies for Indonesian material after the end of public holidays has strengthened the quotes of 5,900 GAR FOB Kalimantan to over 90 USD/t.
The growth in demand from metallurgical plants in the Asia-Pacific region supported Australian coking coal indices, bringing them closer to the level of 115 USD/t.
Source: CAA Analytics
