Last week, EU coal prices witnessed upside move over 165 USD/t. The continuing rally of TTF gas quotes to 51.5 EUR/MWh (+6.5 EUR/MWh to August 25, 2021) remains the key driver behind the surge in coal prices.
Shortage of gas supplies to Europe resulting from a series of unexpected disruptions at the enterprises of Gazprom and the US liquefied fuel being redirected from Europe to Asia reduced EU gas storage capacity to 8-year lows below 60%.
Speculations over the deferred launch of the Nord Stream-2 gas pipeline fuel the fears of market participants, boosting both gas and coal prices. The high volumes of coal generation in Germany, which amounted to 37 Twh (+27% compared to last year), provide additional support to coal quotes.
Also, lower wind output in the EU countries at 752 KWh (-306 KWh to August 25, 2021) had a positive impact on the dynamics of coal indices.
Nevertheless, higher EU carbon prices, reaching 60.1 EUR/t (+3.6 EUR/t to August 25, 2021), constrain further strengthening of quotes. ARA coal stocks amounted to 4.7 mio t (+0.3 mio t to August 25, 2021).
Climbing trading activity of consumers from the Asia-Pacific countries and tight supplies of coal via the railway line, connecting the coal-producing provinces of South Africa with the port of Richards Bay, went on keeping South African coal prices at 13-year highs over 150 USD/t.
The prices for 5500 kcal/kg NAR coal of domestic production in the port of Qinhuangdao increased over 165 USD/t due to a reduction in coal stocks at the Chinese ports below 4 mio t after the end of a recent 4-day quarantine. It is expected that coal consumption in China may grow since average daily temperatures in China started to dwindle.
The Australian coal prices are in an uptrend over 170 USD/t. Indian consumers replenish their stocks after the end of the monsoon season, increasing Australian coal quotes. Current coal supply crunch in Australia amid the ban on coal mining, which was extended until September 10, 2021 had a positive impact on the coal prices.
Heightened trading activity of Indian buyers and the government restrictions on coal exports increased Indonesian coal indices over 130 USD/t.
Limited supplies of Australian coking coal to the export market and the demand of Chinese steel mills for imported material contributed to the growth of the indices of metallurgical coal from Australia over 260 USD/t.
From August 05 to September 10, 2021, coal production in Australia is strictly limited due to the outbreak of Covid-19 last month. The reduction of supplies from Mongolia to China make Chinese steel companies buy Australian material from Asian traders. In 2020, the Chinese government has imposed a ban on coal imports from Australia.
Source: CAA Analytics
