March 8, 2024 - Last week thermal coal indices on the European market continued steady recovery above 115 USD/t. The sharp price strengthening was driven by the introduction of sanctions against major Russian coal companies (SUEK and Mechel) as well as by rising gas quotes and a reduction in ARA stockpiles. Prices were also supported by short sellers, covering their positions on the paper market.

Coal stocks at ARA terminals decreased to 6.5 mio t (-0.1 mio t w-o-w) owing to reduction in supplies to the EU and re-export from ARA to Mediterranean countries.

Gas quotations at TTF hub strengthened to 285.3 USD/1,000 m3 (+0.3 USD/1,000 m3 w-o-w) on the back of planned shutdown of Oseberg and Karsto gas fields.

South African High-CV 6,000 rose above 95 USD/t on higher demand from Indian sponge iron and cement producers. The rise was also attributed to an expected increase in supplies of South African material to Turkey and Asian countries, resulting from targeted sanctions against Russian exporters.

In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao dropped by 1 USD/t to 131 USD/t, following lower domestic quotes, caused by rising temperatures, higher inventories of generating companies and low utilization by cement producers. During the annual meeting, the Chinese authorities outlined a GDP growth target of 5% in 2024, to be achieved mainly by the high-tech but non-energy-intensive sector. The government also plans to reduce electricity consumption by 2.5% per unit of GDP in 2024.

In major producing provinces, such as Inner Mongolia and Shanxi, prices were lowered by 1.1 USD/t, while in Shaanxi province the reduction averaged 2.8 USD/t.

Coal company CHN Energy announced that it will maintain production at 50 mio t per month, despite its Shenhua unit earlier had voiced plans to cut output this year by 3% to 316.1 mio t.

Inventories at the 6 largest coastal thermal power plants rose 0.4 mio t to 13 mio t, however, consumption increased from 798 kt/day to 803 kt/day.

Indonesian 5,900 GAR gained 1 USD/t to 94 USD/t, while 4,200 GAR remained flat at 59 USD/t.

Indonesian coal price growth slowed amid high freight rates. Nevertheless, there is still a supply deficit on the spot market. On the part of Indian power plants, the demand decreased due to sufficient inventories, although last week the Indian government extended until June 2024 the mandatory requirement to partially cover the needs by imported coal in the amount of 6%, that may provide support to quotations in the medium term.

Australian High-CV 6,000 jumped to 135 USD/t on tight supply from Indonesia and renewed interest from some Northeast Asian countries as a result of anti-Russian sanctions.

Australian HCC metallurgical coal quotations tumbled to 305 USD/t because of higher supply as well as limited demand from India, with Indian traders ready to return to buying Australian material if prices adjust to the level of the US coal quotes.

In China, the buying activity remains subdued since steel producers face slowing demand for their products, as evidenced by the PMI index, which has been in contraction for two consecutive months. Last week, the China Steel Industry Planning and Research Institute forecasted a 2% drop in steel demand to 875 mio t in 2024.