Last week, EU market saw a decline in thermal coal indices below 106 USD/t. News about Colombian producer Cerrejon ramping up exports after disruptions last month maintain pressure over the quotes. TTF gas prices remained at the level of 28.2 EUR/MWh (unchanged to June 09, 2021). EU carbon prices decreased to 51.34 EUR/t (-2.17 EUR/t to June 09, 2021). ARA coal stocks got stabilized at 4.8 mio t (-0.2 mio t to June 09, 2021).
On June 15, 2021, the Czech government petitioned the European Union’s Court of Justice to fine Poland 149 mio USD for refusing to suspend mining at Turow coal mine, located on the border with the Czech Republic. Last month the court ordered Poland to cease mining at the mine due to violations of environmental regulations. At the moment, the Polish government refuses to close the enterprise, as coal accounts for more than 50% of the country’s generation, compared to 25% of RES output. In 2019, the European Commission adopted a climate strategy that aims to achieve carbon neutrality in the EU by 2050.
Due to a number of deals with Indian coal traders, the price of South African export coal, hitting multi-year highs, is flat in the range from 114 mio USD to 116 mio USD. Richards Bay coal stocks fell to 2.87 mio t (-0.1 mio t to June 09, 2021).
South African President Cyril Ramaphosa freed up private companies to set up generating plants with a capacity of up to 100 MW without a licence from the National Energy Regulator. The move is intended to ensure the country’s energy security by depriving the state-owned generating company Eskom of its monopoly in coal-fired generation. In 2020, after the failure of a number of Eskom companies, the South African government was forced to introduce a rolling blackout across the country.
Prices for 5500 kcal/kg NAR coal of domestic production in the port of Qinhuangdao increased over 145 USD/t. China’s National Development and Reform Commission (NDRC) has refused to impose a price cap on thermal coal at mines and loading ports due to the limited supply of the material in the domestic market and rising demand and prices for electricity.
On June 15, 2021, the Chinese government decided to partially close the Yantian terminal in the Chinese port of Shenzhen. The reason for the closure was an outbreak of coronavirus in Guangdong Province. Difficulties with receiving cargo occurred not only in Yantian, but also in the nearest terminals of Shekou in Shenzhen and Nansha in Guangzhou — the third and fifth largest ports in the world. According to experts, the situation may stabilize by the beginning of autumn.
Australian thermal coal prices exceeded 128 USD/t due to increased demand from South Korean and Taiwanese generating companies and limited shipments of coal from Australia. Given the growth in the Australian coal prices, companies from Taiwan and South Korea are buying coal with a delayed delivery in Q4 2021. Due to the flooding in Australia in March 2021, a number of local mining enterprises were forced to reduce production and are now selling the material remaining in warehouses.
Limited supplies of export Indonesian coal due to heavy rains in the south of the country, as well as stronger demand from China boosted quotes of Indonesian 5900 GAR coal over 95 USD/t.
Seasonal demand of steelmakers in the Asia-Pacific countries for metallurgical coal and a number of large purchases of coking material by Indian traders supported the prices of metallurgical coal from Australia over 173 USD/t.
Australian producer Foxleigh and Japanese steel company Nippon Steel approved the benchmark price of low-volatile PCI coal for Q3-2021 at 123 USD/t FOB.
The Japanese steel company JFE Steel decided to increase its steel production to ensure the supply of raw materials for the construction of windmills in Japan. The Japanese government’s green strategy provides for the construction of windmills with a capacity of up to 10,000 MW by 2030 and up to 45,000 MW by 2040.
Source: CAA Analytics