World coal market: brief overview

High volatility persists in the global coal markets. Last week, an increase in gas supplies from Russia to Europe amid negative sentiments in the Chinese market pushed the European thermal coal indices to further decline below 140 USD/t, while Russian FOB Ust-Luga 6000 slipped to 160 USD/t.

On November 09, 2021, Gazprom announced that the plan for gas injection into European storage facilities was approved. Five European underground storage facilities will be replenished in November. ARA coal stocks climbed 4% up to 3.8 mio t.

South African quotes plunged below 135 USD/t. Despite the lower price and waning demand for South African material by Indian consumers, the indices may rise due to ongoing operational issues on Transnet’s railway line, connecting the country’s coal-producing provinces and the port of Richards Bay. Coal inventories at Richards Bay terminals remain at 2.5 mio t.

Chinese spot coal prices of 5500 kcal/kg NAR were in the range of 172-180 USD/t, FOB Qinhuangdao. Coal production in China spiked to a record high. The Chinese authorities secured a reduction in thermal coal prices on the domestic market and managed to significantly reduce the electricity shortage. However, a shortfall of thermal coal in the country may happen again within this winter.

According to the National Development and Reform Commission of China (NDRC), coal mining giants, including Mongolia Yitai, China National Coal Group and China Energy Group, as well as more than 10 smaller companies have lowered their prices. As a result, the quotes of 5500 kcal/kg coal fell below 1000 yuan/t (156 USD/t), EXW.

Australian indices were kept at the level of 160 USD/t amid the increased trading activity of some Asian traders.

Price adjustments in Indonesia continued, resulting from tightening government regulation and the decline in quotations on the Chinese domestic market, weighing on coal quotes of Indonesian 5900 kcal/kg GAR below 155 USD/t.

Slow trading activity by Asian steel mills is putting pressure on Australian coking material quotes, which dropped to 400 USD/t

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