January 21, 2024 - Over the past week, thermal coal indices on the European market kept weakening below 105 USD/t. Quotes remain under pressure amid expected warmer temperatures, rising inventories, gas prices falling to two-year lows, as well as strong renewable generation.

With temperatures forecast to rise and supply expected to increase, gas quotations at the TTF hub dropped sharply to 311 USD/1,000 m3 (-41 USD/1,000 m3 w-o-w) despite QatarEnergy’s refusal to ship LNG to Europe via the Red Sea, stemming from the escalating conflict in the Middle East.

Coal stocks at ARA terminals climbed to 6.6 mio t (+1 mio t w-o-w).

South African High-CV 6,000 ranged between 96-97 USD/t, still staying below 100 USD/t level on the back of limited demand in Europe.

On January 14, two trains collided on the rail line leading to Richards Bay Coal Terminal (RBCT), damaging a 215 m long railway track. However, South African rail operator Transnet will resume coal train traffic as early as January 18. Meanwhile, rail track #2 (North Corridor) will be operational from January 18, and track #1 will be available from January 20. According to some sources, the volume of transportation on this infrastructure reaches 1.5 mio t per week.

Inventories at RBCT amounted to 3.6 mio t, while recently the volume of loading to the terminal jumped to a record 5.3 mio t in December (+1.9 mio t vs. November 2023), that was driven by the commissioning of 7 new locomotives. Transnet also plans to ramp up the number of dispatches from 25 to 30 trains per day.

In addition, a new conveyor belt was commissioned at the Richards Bay Dry Bulk terminal, resulting in an increase in coal shipments and significantly reducing the need for trucks that had been congesting the access roads to the terminal because of limited rail infrastructure capacity.

In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao decreased by 1 USD/t to 129 USD/t. Despite the reduction of stocks in ports and forecasted cold weather, quotations were under pressure, caused by high imports and strong supply in the domestic market, as well as reduced coal consumption at thermal power plants and lower demand from industrial enterprises. Also, demand from generating companies on the spot market declined as imported material was more attractive. Russian coal 5,500 NAR with delivery in late February is offered at 123 USD/t on DDP terms.

Consumption at the 6 largest coastal thermal power plants amounted to 853 kt/day (-6 kt/day w-o-w). At the same time, total stocks in 9 largest ports shrank to 23 mio t (-1 mio t w-o-w).

Indonesian 5,900 GAR added 1 USD/t to 93 USD/t, resulting from delays in government approval of mining companies’ 2024 plans, that are holding back the supply growth.

Australian High-CV 6,000 was holding at 335 USD/t on news of partial shutdown of mining facilities in China and Australia. Pingmei suspended production at 13 mines, following an accident and workers’ fatalities in Henan province, while BHP shut down its 4.6 mio t/year Saraji mine in Queensland for an indefinite time after an accident. In addition, BHP lowered its metallurgical coal production forecast for FY 2024 by 10-12 mio t to 46-50 mio t.

South Korea’s POSCO and Japan’s Nippon Steel agreed with Australia’s Foxleigh on a Low Vol PCI benchmark price for Q4 at 229 USD/t FOB Australia, which is about 25% higher than 183 USD/t in Q3.