World coal market: brief overview

Over the past week, thermal coal indices in the European market spiked above 315 USD/t, subsequently pulling back to 290 USD/t, following the current high volatility, uncertainty in the gas market, rising gas prices and a decline in wind generation amid the ongoing coal supply shortage in global markets. As of March 23, 2022, Germany’s wind capacity utilization rate reached its lowest level of 0.8 GW since September 2022. Coal stocks at ARA terminals climbed to 2.9 mio t (+0.2 mio t w-o-w).

On March 23, Putin announced that “unfriendly” states would be forced to buy Russian natural gas in rubles. After this statement, gas spot prices in Europe at TTF hub jumped by half to 1,048 USD/1,000 m3, later dropping to 1,027 USD/1,000 m3. An additional factor in the price increase is the unscheduled maintenance at Norway’s largest gas field Troll.

High activity of Indian traders strengthened the quotation of South African material above 275 USD/t. India’s demand for Russian coal declined after the start of Russia’s military operation in Ukraine. This was caused by uncertainty over methods of payments between the parties after Russia’s exclusion from the SWIFT payment system. After a recent record spike in indices, South African material prices are expected to become less volatile in the short term, since concerns over the European energy crisis are easing as the winter season draws to a close. Coal stocks at Richards Bay terminal fell to 2.2 mio t (-0.8 mio t m-o-m).

In China, spot prices for NAR 5500 rose by 7.00 USD/t to 252 USD/t FOB Qinhuangdao, driven by COVID-19 outbreak, which along with heavy rains in northern provinces and safety checks at mines hinders an increase in supply. The uncertainty over coal shipments, due to the expected maintenance of Daqin rail line in April, also contributes to the price growth.
Australian 6000 index fell to 250 USD/t, following the European market trend as well as declining buyer interest amid logistical issues, including rail deliveries disruption and increased vessels queues at Australian ports, caused by heavy rains, storms and flooding in the country.

High volatility, typical for the current state of the global coal market, also influenced the quotes of Indonesian material 5900 GAR, which corrected to 210 USD/t after reaching historic highs in the first half of March 2022. The coming holiday of Ramadan (April 02-May 02, 2022) may further limit supply from Indonesia due to the expected decline in production during this period.

Australian metallurgical coal indices fell below 580 USD/t amid sufficient spot supply for April and forecasted favorable weather in Australia.

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