March 3, 2024 - Last week thermal coal indices on the European market surged up to 110 USD/t, driven by the introduction of sanctions against major Russian coal companies (SUEK and Mechel) as well as strengthening of gas prices and a reduction in stockpiles at ARA terminals. At the same time, negative fundamental factors remain, including warmer temperatures and increased RES generation.

Gas quotations at the TTF hub firmed to 285 USD/1,000 m3 (+18 USD/1,000 m3 w-o-w), resulting from an unplanned halt of supplies from the Norwegian Skarv field and a decline in storage inventories to below 64%.

South African High-CV 6,000 slipped to 92-93 USD/t level, while Medium-CV material rose significantly, strengthening above 85 USD/t, supported by demand from India. Meanwhile, some sponge iron producers said shipments for March could not be found in the market as all volumes were sold out, according to suppliers.

Inventories at Richards Bay Coal Terminal (RBCT) stood at 2.3 mio t, while further declines will slow down coal loading operations and support prices. However, the terminal is expected to see increased transshipment in March as truck transportation to other ports became economically unviable due to low prices in international markets. RBCT is forecasted to handle 4.5 mio t in March. (+0.5 mio t or +13% vs. February 2024).

In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao stayed at 132 USD/t. Chinese trading activity continues to gain momentum after the end of the holidays, but the number of coal producers returning to operations increased, weighing on domestic prices as supply improved. For example, in Shaanxi province, more than 80% of underground and open-pit mines resumed production. Moreover, the regulator’s initiative to cut output for minimizing occupational accidents faced resistance from regional authorities.

Meanwhile, Shenhua announced plans to curb production in 2024, as did Shandong province, home to Yancoal, which lowered its extraction targets for the current year. Shenhua aims to mine 316.1 mio t of coal (-8.3 mio t or -2.59% y-o-y).

Inventories at the 6 largest coastal thermal power plants fell by 0.16 mio t to 12.56 mio t as consumption increased from 645 kt/day to 793 kt/day.

Indonesian 5,900 GAR added 1 USD/t to 93 USD/t on tight supply and higher demand from Chinese buyers as sanctions caused several Chinese state-owned banks to withhold payment for shipments of Russian material.

Indian buyers expect Chinese consumer activity to support Indonesian coal prices for the next two weeks, before starting a downward correction.

Australian High-CV 6,000 climbed above 125 USD/t, prompted by demand from Asia-Pacific countries and limited supply from Indonesia, where heavy rains continue to limit carrying capacity.

Australian HCC metallurgical coal quotations are holding below 313 USD/t on the back of limited demand from India. Furthermore, the rainy season is coming to an end in Australia and supply is stabilizing. In China, coke prices were lowered again and Chinese producers are in no hurry to replenish stocks as they expect limited demand for steel in March-May (the period when demand traditionally peaks), related to the slowdown in infrastructure projects and the real estate sector.