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World Coal Market: Brief Overview


May 6, 2023 - Over the past week, European thermal coal quotations fell below 130 USD/t. Prices are under pressure caused by a mix of factors such as rising temperatures, strong wind generation, as well as an increase in ARA stockpiles and a downtrend in the gas and electricity market. A period of mild spring weather with reduced consumption continues in Europe, with the heating season over and the summer heat, which contributes to the demand for air conditioning, not yet arrived. Consequently, some EU countries saw new cases of electricity prices in day-ahead contracts dropping to negative numbers.

Gas quotes at the TTF hub dipped to 420.3 USD/1,000 m3 (-21.7 USD/1,000 m3 w-o-w). Europe keeps building up gas reserves owing to a steady supply of pipeline gas and LNG. The current level of gas inventories is just over 60%. Coal stocks at ARA terminals grew to 6.9 mio t (+0.1 mio t or +1.3% w-o-w).

South African High-CV 6,000 plunged below 120 USD/t amid low activity from Europe. The demand was also muted from India, where domestic production is expected to rise, while consumption is declining as the heat wave eases.

In China, spot prices for 5,500 NAR at the port of Qinhuangdao edged down 2 USD/t to 145 USD/t, following the national holidays (Labor Day), from April 29 to May 3, and the suspension of trading activity for that time.

Indonesian 5,900 GAR totaled 120 USD/t (+1 USD/t w-o-w), strengthening on increased interest from Asian countries and reduced supply in the spot market, resulting from heavy rains that slowed production and transportation operations.

In addition, state-owned Bukit Asam Company (PTBA) declared force majeure on coal shipments, stemming from railcars derailing because of a mudslide. PTBA says it has not loaded coal by rail since April 28, missing deliveries of about 1 mio t in April and May. This incident may negatively affect PTBA’s production (41 mio t) and rail shipments (32 mio t) plans for 2023.

High-CV Australian 6,000 declined below 180 USD/t, as demand from European and Asian consumers declined.

On April 27, 2023, the World Bank presented a forecast showing that Australian coal prices may average 200 USD/t in 2023 and 155 USD/t in 2024, mainly because of the increase in LNG consumption in Europe and the rise in production in China and India.

Australian metallurgical coal prices stood at the level of 235 USD/t. Market participants are taking a wait-and-see approach until the end of the holiday weekend in China, where about 30 steel mills are scheduled to carry out technical maintenance, which will last through the end of May.