World coal market – week 49

Last week, thermal coal quotations on the European market strengthened above 133 USD/t, given the following factors:

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• ongoing uncertainty with the launch of Nord Stream 2;
• significant increase in regional prices for electricity, natural gas and carbon permits;
• forecasted decrease in average daily temperatures in a number of European countries.

Russian FOB Ust-Luga 6000 reached 170 USD/t (+5 USD/t w-o-w).

South African indices surged above 135 USD/t amid the increased demand from India. India’s Ministry of Power urged state-owned power companies to lift imports of thermal material. Coal stocks at Richards Bay coal terminal decreased further to less than 3 mio t.

In China, spot prices for 5500 kcal/kg NAR FOB Qinhuangdao were in the range of 175-180 USD/t. Coal quotes on Chinese domestic market remained at a relatively high level. Nevertheless, trading volumes were insignificant, owing to high inventories at most end-users and a large gap between spot prices and the benchmark, set by the Chinese government for CY22 FOB term contracts at 86-133 USD/t.

Australian coal indices dropped to 155 USD/t amid weak trading activity by Asian traders who have taken a wait-and-see attitude over fears of the potential impact of the Omicron virus.

Indonesian 5900 GAR dropped below 135 USD/t due to reduced demand from China, which is increasing its own coal production in line with the recent NDRC resolutions, while Asian traders are expecting prices to fall further.

Australian metallurgical coal quotes strengthened above 340 USD/t following a storm warning issued by the Australian Bureau of Meteorology (BOM), due to heavy rains, large hail and destructive wind gusts in the southeastern Australian state of Queensland. AMB expects increased showers and thunderstorms in several states by the end of this week, that could lead to supply disruptions.

Source: CAA Analysis