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World Coal Market: Brief Overview



November 13, 2023 - Over the past week, thermal coal quotations on the European market bounced back up after a drop, regaining the 130 USD/t level, while the energy market still remains affected by negative fundamentals, such as full gas storages in the EU, lower electricity prices and above-normal temperatures. During the last Coaltrans conference in Madrid, it was stated that the reduction in Russian gas supplies could result in 20 mio t higher coal demand in Europe after 2023.

Gas quotes at the TTF hub fell to 504 USD/1,000 m3 (-27.2 USD/1,000 m3 w-o-w) as storages in the EU appeared to be completely filled and Norway stepped up pipeline supplies.

South African High-CV 6,000 slipped below 120 USD/t on the back of a decline in EU energy market prices and limited demand from India, where the construction sector activity is slowing down.

The South African Court of Appeal ruled in favor of the state over the Gupta family’s acquisition of shares in Optimum Coal Mine and Optimum Coal Terminal. The assets, worth 219 mio USD, will thus be nationalized.

Transnet appointed an infrastructure manager to attract private investment and develop the rail network. The decision was welcomed by the Minerals Council of South Africa.

In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao lost 5 USD/t to 130 USD/t on continued stockpiles growth and limited demand.

The National Development and Reform Commission (NDRC) of China issued recommendations for long-term contracts for 2024, with no specific volumes outlined, unlike 2023 (2.90 billion t) and 2022 (2.60 billion t).

However, mining companies will be required to enter into long-term contracts for 80% of coal volumes (unchanged by 2023) and power plants for 80% instead of 105% in 2023, that should help to increase volumes and activity on the spot market and lead to higher volatility in coal quotations.

Coal stocks at Qinhuangdao port raised to 6.2 mio t, with combined inventories at 9 major ports rising to 28.8 mio t (+0.2 mio t and +1.8 mio t respectively w-o-w).

Indonesian 5,900 GAR edged down 3 USD/t to 95 USD/t, remaining under pressure from reduced buying activity.

In addition, the government is moving towards agreeing applications to increase production quotas, that will help to boost supply.

Australian High-CV 6,000 dipped to 120 USD/t level, due to limited demand from India as well as Northeast Asia, where warm winter is expected. In addition, Colombia ramped up its shipments to the Asia-Pacific by 8% last week.

Australian HCC metallurgical coal prices plummeted below 310 USD/t despite strong demand in India and Southeast Asia, causing buyers to take a wait-and-see attitude in anticipation of a further downward correction. Pressure on indices came from increased supply, lower steel prices and Indian buyers’ considering coal supplies from the US.

BHP Mitsubishi Alliance (BMA) completed a 3-year project to replace a shiploader at Hay Point Coal Terminal (HPCT), where Queensland metallurgical coal is shipped for export, that will increase transshipment capacity and improve the terminal’s ability to handle vessels in bad weather.