Over the past week, downward movement of thermal coal prices in Europe continued. Pressure on indices, which fell below 195 USD/t, resulted from the increase in inventories, drop in gas quotations, as well as growth of temperatures above the climatic norm and expected further warming.
Last week, the EU countries agreed on a gas price ceiling of 180 EUR/MW or about 2,000 USD/1,000 m3, which will come into effect on February 15, 2023. Gas contracts on the TTF hub fell to 1,150 USD/1,000 m3 (-300 USD/1,000 m3 or -20.7% w-o-w). At the same time, gas storage facilities in the EU countries stay well above 80% of their capacity.
South African High-CV 6,000 quotes slipped below 180 USD/t, following the downtrend of the European market. Indian power and cement producers have recently been stepping up purchases of Mozambican coal, that also has a negative impact on the indices.
Persistent issues with coal shipments to Richards Bay Coal Terminal (RBCT) contributed to a more than two-fold rise in exports through alternative terminals in 2022 vs. 2020. According to preliminary data, coal transshipment at such terminals by the end of this year may total at least 12 mio t (+4.5 mio t to 2021 and +7.3 mio t to 2020).
In China, spot prices for 5,500 NAR at the port of Qinhuangdao fell to 188 USD/t (-7 USD w-o-w), despite the cold weather, as the number of COVID-19 contamination cases has been growing, leading to a reduction in industrial activity and closure of some production facilities.
Thus, coal consumption at the country’s largest power plants over the past week decreased by 3.5%, while their stocks increased. In addition, in January-November the total production of the 10 largest companies in 11 months amounted to 2.1 billion t (+130 mio t or +7% y-o-y).
Indonesian 5,900 GAR stood at 159-160 USD/t, with the price of Low-CV 4,200 GAR strengthened above 93 USD/t. The Indonesian coal market is supported by Chinese and South Korean demand and low supply, as local miners focus on meeting domestic market obligations. Unfavorable weather conditions also positively affect coal quotes.
High-CV Australian 6,000 adjusted below 402 USD/t, being the most stable index on the back of the slowdown in coal handling at major Australian ports, due to equipment maintenance. In addition, the local government published a forecast, which assumes high prices to remain until the end of the La Nina natural phenomenon (March 2023).
Australian metallurgical coal prices rose to 275 USD/t on limited supply and optimistic expectations of improvement in Chinese-Australian relations, following the visit of Australian foreign minister to China on December 20 to discuss trade issues (the first such meeting since 2018). Additional support was provided by better price conditions on the steel market.