February 13, 2024 - Last week thermal coal indices on the European market continued to hold below 100 USD/t level. Coal quotations remain under pressure amid an increase in inventories at ARA terminals to the record highs since mid-October 2023 and lower gas prices, caused by limited demand resulting from warming temperatures and growth in wind generation.

Gas quotes at the TTF hub fell to 314 USD/1,000 m3 (-24 USD/1,000 m3 w-o-w) on the back of warmer temperatures and initiatives to de-escalate the situation in the Middle East.

Coal stocks at ARA terminals grew to 7 mio t (+0.34 mio t w-o-w).

South African High-CV 6,000 was in the range of 92-95 USD/t, driven by stronger demand from India. In the past week, market participants at the McCloskey coal conference in South Africa, including Asian and European consumers, agreed that South African High-CV 6,000 quotations will maintain at 100 USD/t FOB in the near term.

Also, according to participants, coal companies turned less active in using trucks, and a drop in prices for 5,500 material to 75 USD/t FOB may lead to a crisis among minor South African producers as truck transportation becomes economically unviable, with rail infrastructure capacity remaining inadequate. Some estimates put the cost of coal transportation by trucks at 37-40 USD/t against the rail tariff of 12 USD/t.

In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao gained 1 USD/t to 129 USD/t as stocks at ports declined and the weather became colder, however coal consumption at power plants went down ahead of the Chinese New Year. Furthermore, many smaller plants have already halted production and larger plants are expected to keep production limited until the end of February to maximize risk mitigation to prevent accidents, so port inventories for the holiday period will not be as high as it was previously anticipated.

Coal consumption at 6 largest Chinese coastal thermal power plants dropped to 773 kt/day (-80 kt/day w-o-w). Total stocks at 9 major ports decreased to 22.1 mio t (-0.6 mio t w-o-w).

Indonesian 5,900 GAR climbed to 93 USD/t (+1 USD/t w-o-w), while Low-CV 4200 GAR fell to 57 USD/t FOB Kalimantan. Prices for Indonesian coal moved in mixed directions given the increased demand from India, while in South Kalimantan and Sumatra coal transportation from the deposits to the ports was hampered due to heavy rains.

Australian High-CV 6,000 was holding slightly below 120 USD/t, while prices for Medium-CV material remain supported because of logistical issues with deliveries from Indonesia, caused by unfavorable weather conditions.

Australian HCC metallurgical coal quotations plunged to the level of 315 USD/t ahead of New Year holidays in China, which showed deteriorating conditions, as the margins of Chinese producers of hot-rolled steel and rebar at the end of January turned out to be record negative. Australian supplies have not yet normalized after the end of Cyclone Kirrily, which also encourages buyers to look for alternative raw materials from other countries. In the Indian market, Australian material is facing increasing competition from US exporters.

Australia’s Kestrel Coal Resources said supplies from its 7.1 mio t per year Kestrel mine, where mining was halted on January 15 due to technical issues, would resume soon after approval from the government.