Gas Quotations and Norwegian Gas Supplies
The gas quotations at the TTF hub recently corrected down to 330 USD/1,000 m3, marking a decrease of 10 USD/1,000 m3 week-over-week (w-o-w). This downward adjustment is primarily attributed to an increase in Norwegian gas supplies. The availability of gas from Norway has mitigated some of the supply concerns that had previously kept prices elevated.
ARA Coal Stocks and European Shipments
At the ARA terminals, coal stocks decreased to 5.4 million tonnes (mio t), a reduction of 0.2 mio t w-o-w. This decline brought the coal stocks below 5.5 mio t for the first time in two years. The primary reason for this decrease is the decline in European shipments due to weak demand. Lower consumption across Europe has led to fewer shipments and, consequently, reduced stockpiles.
South African Coal Market Dynamics: Strengthening Prices and Stock Levels
South African High-CV 6,000 coal prices strengthened, surpassing 106 USD/t. This increase is driven by low stockpiles and steady demand from India and the Asia Pacific region. At the Richards Bay Coal Terminal (RBCT), inventories rebounded from their lows, increasing to 2.1 mio t (+0.2 mio t w-o-w).
Eskom's Coal-Fired Power Plants
In a strategic move, the South African government plans to extend the lifespan of Eskom’s coal-fired power plants. This extension is favorable news for local mining companies, as South African combined thermal power plants (TPPs) consume a total of 100 mio t of coal, accounting for about 50% of the country’s overall production. The closure of the three thermal power plants—Camden, Grootvlei, and Hendrina—is now expected to be delayed from 2023-2027 to 2027-2030.
Chinese Coal Market Trends: Spot Prices and Production Adjustments
In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao increased by 1 USD/t, reaching 120 USD/t on the back of anticipated higher demand due to restocking ahead of summer. However, these quotations saw a downward adjustment recently after Shanxi province’s authorities announced an easing of control over production volumes. They requested coal companies to ramp up output to 110% of available capacity and resume night shifts.
Restart of Previously Halted Mines
The authorities also permitted the restart of mining at previously halted mines where accidents had occurred, provided that remedial works were carried out and violations were fixed. This move is aimed at stabilizing coal supply in the market.
Inventory and Consumption Trends
Inventories at the six largest coastal thermal power plants increased from 14 mio t to 14.3 mio t, while consumption rose from 740 kt/day to 746 kt/day. Stocks at the nine largest ports totaled 24.4 mio t (+1.2 mio t w-o-w), reflecting a steady supply chain management in anticipation of higher demand.
Indonesian Coal Market Updates: Rising Prices and Demand Factors
Indonesian 5,900 GAR coal climbed to 91.8 USD/t (+1.3 USD/t w-o-w), while Low-CV 4,200 GAR firmed to 57 USD/t (+1 USD/t w-o-w). The upward movement in Indonesian coal quotations is driven by stable demand from Chinese chemical, cement, and power producers. Additionally, there has been increased demand from India for Low- and Medium-CV coal and from Japan for 5,700-6,000 GAR material. This positive dynamic is also explained by the recent sharp warming in some Asian countries, including India, where the government required TPPs running on imported coal to load generation capacity at 100% until October 15.
Australian Coal Market Analysis: Price Movements and Demand Shifts
Australian High-CV 6,000 coal prices dipped below 145 USD/t, while Medium-CV 5,500 edged up to 90 USD/t. The Australian coal indices displayed mixed movements due to growing demand for Low- and Medium-CV coal from the Asia-Pacific region. This increase in demand was juxtaposed with falling prices for High-CV coal, influenced by lower prices in the European energy market.
Metallurgical Coal Market
Australian HCC metallurgical coal quotations slumped to 235 USD/t. The steel market's deteriorating conditions have led Chinese coke producers to resist raising their product prices, thereby putting downward pressure on Australian coal indices.
Anglo American's Strategic Shifts
As part of a large-scale business restructuring, Anglo American has revealed plans to sell its metallurgical coal division. This decision aligns with the company's strategy to focus more on copper and iron ore production. Anglo American has indicated that it is currently considering an offer from one potential buyer, having recently rejected an offer from BHP. In 2023, Anglo American produced 16 mio t of metallurgical coal, showcasing its significant presence in the market.
Global Coal Market Insights
The global coal market remains dynamic, influenced by regional demand and supply shifts. European coal stocks are decreasing due to lower demand, while South African and Indonesian markets experience rising prices driven by robust demand from Asia. China's production adjustments and inventory changes reflect strategic responses to anticipated demand. Australian coal markets show mixed trends, with a notable decline in metallurgical coal prices. These insights underscore the intricate balance of global coal supply and demand, highlighting the sector's ongoing evolution and the strategic decisions by major players like Anglo American.
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