Last week, thermal coal indices in Europe continued their rally over 120 USD/t. TTF gas quotes rose to 35.1 EUR/MWh (+3.9 EUR/MWh to June 23, 2021) amid seasonal electricity demand and decreasing supply of liquefied natural gas (LNG) to the EU, boosting coal burning. Lowering wind output in a number of European countries provided additional support for coal prices. The volume of windmill generation in Europe decreased to 670 GWh (-432 GWh to May 2021). Apart from that, the coal market welcomed the news about the consolidation of 100% of the Colombian company Cerrejon by Glencore. On June 28, 2021, Glencore bought 66% of Cerrejon from BHP and Anglo American and became the sole owner of the enterprise.
Despite weakening demand from Indian generating companies South African coal prices exceeded 114 USD/t due to the limited coal supplies for export. According to market participants, a number of companies from India are staying on the sidelines, waiting for a decrease in prices in the short term. Although South African railway operator Transnet plans to start repair works in August, the volume of cargo, transported via railway line between coal-mining provinces and the port of Richards Bay, has already started to decline.
The suspension of the work of some coal mines by the Chinese government before the start of public holidays boosted prices of 5500 kcal/kg NAR coal of domestic production in the port of Qinhuangdao over 152 USD/t. From June 24, 2021 until July 05, 2021 in the largest mining province of Shanxi 128 mines with a total capacity of 186 t of coal per year were halted.
A shortage of Australian coal in the Asia-Pacific market positively impacted the quotes of Australian coal over 135 USD/t. The shortage of material on the market stemmed from the suspension of the rail line between the Dalrymple Bay coal terminal and the Australian coal producing provinces, following an accident last week. In addition, according to experts, this year the rainy season in the North-East of Australia may start earlier, which is why generating companies from Japan and South Korea increased purchases of Australian coal in the spot market.
Limited supplies of Indonesian coal for export supported the indices of 5900 GAR coal over 102 USD/t. Due to heavy rains in southern Indonesia and Covid-19 outbreaks at a number of enterprises, some Indonesian producers are forced to declare force majeure over supplies of a minimum amount of coal under contracts.
Coking coal prices from Australia are in an upward trend over 195 USD/t due to limited supplies of the material to the export market and the growing demand of metallurgical plants in the Asia-Pacific region. According to market participants, the Chinese steel companies sharply increased the volume of purchases of Australian coal from traders in the Asia-Pacific region, due to lowering supply of coking coal from Inner Mongolia and the suspension of work of some mines ahead of public holidays.
Source: CAA Analytics
