World coal market: brief overview

Last week, the European market saw a drop in thermal coal quotations below 180 USD/t amid lower gas prices, the lifting of the ban on coal exports from Indonesia and the probable easing of tensions around the political situation between Russia and Ukraine. Moreover, the US administration asked the largest LNG consumers in Asia-Pacific to reduce purchases in order to increase supplies to Europe. Milder weather and the growth of wind generation in Europe were additional factors, which had a negative impact on coal prices.

Coal stocks at ARA terminals decreased to the lowest level since June 2016, amounting to 3.5 mio t (-0.2 mio t to January 26, 2022).

South African indices pulled back from 3-month highs, slumping to 185 USD/t as the ban on coal exports from Indonesia was lifted. At the same time, coal inventories at Richards Bay Coal Terminal decreased to about 2 mio t, which is a record low level for the last 5 years. In 2021, South Africa’s total coal exports fell to a 20-year low of 63 mio t (-10 mio t or -14% y-o-y), resulting from rail infrastructure issues.

From January 31 to February 06, China is celebrating the New Year, significantly reducing business activity in the domestic market. Chinese spot prices for 5,500 NAR strengthened by 5 USD/t to 176 USD/t FOB Qinhuangdao. Nevertheless, China’s National Development and Reform Commission (NDRC), following a meeting with major mining companies last week, stated that domestic thermal coal prices could fall after the holidays. The NDRC instructed suppliers not to raise prices above 140-157 USD/t FOB and 110 USD/t EXW for 5,500 kcal/kg NAR, while urging rail and port operators not to accept cargos, priced above this threshold.

Australian coal prices plunged below 230 USD/t as exports recovered, following a decline in COVID-19 cases in Australia, the lifting of the ban on coal exports from Indonesia as well as low trading activity due to the Chinese New Year holidays.

Strong demand from China, ahead of the Olympics and Chinese New Year holidays, supported Indonesian 5900 GAR up to 135 USD/t FOB Kalimantan. Indonesia completely lifted the coal export ban, imposed by the government from January 01 to January 31, 2022.

Australian coking coal indices maintained at historical highs of 440-445 USD/t, driven by the persisting supply shortages on the global markets.

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