Over the past week, the European market saw a slight correction of thermal coal quotes below 335 USD/t amid an increase in stocks at ARA terminals and Germany's decision to abandon its plans to build strategic coal inventories. This decision resulted from the expectation that the country will have a sufficient amount of coal, despite the embargo on supplies from Russia, coming into force in mid-August. An additional downward factor was the refusal of Hungary and Slovakia to approve the embargo on Russian oil. Also, the pressure on the quotations was put by the commissioning of the Lithuanian-Polish gas pipeline, which connects the Baltic States and Finland with the EU and makes it possible to strengthen the energy security of Europe.

Coal stocks at ARA terminals rose to 5.5 mio t (+0.3 mio t or +6% w-o-w), which is the highest level since December 2020.

South Africa

Increased demand for South African material from the EU countries, trying to replace the supply of Russian coal, positively reflected on the prices of South African material above 325 USD/t. An additional factor of indexes growth is continuing issues with the railway line connecting coal-mining provinces of South Africa and Richards Bay Coal Terminal (RBCT). During a conference in Cape Town, representatives of coal companies Wattle Colliery and Exxaro called on market participants to sue Transnet, which is unable to resolve problems with coal transportation amid record prices on the global market.


In China, spot prices for 5500 NAR surged by 79 USD/t to 181 USD/t FOB Qinhuangdao. Optimism returned to the thermal coal market after the Chinese government promised to provide additional support to the industries affected by COVID-19. There is also a reduction in supply on the spot market caused by maintenance work on the Daqin railway line. Qinhuangdao port stocks decreased to 4.8 mio t (-0.2 mio t. or -3% w-o-w).


Prices for Australian material strengthened above 390 USD/t amid heavy rains in Australia and lower demand for Russian coal due to international sanctions. Japan's Idemitsu Kosan said it plans to stop production at its 1.2 mio t/year Muswellbrook mine in New South Wales in 2022, following the depletion of resources. Idemitsu also expects coal extraction at its Ensham mine in Queensland to decline by 5.5% to 3.5 mio t.


Indonesian 5900 GAR slightly decreased to 198 USD/t FOB Kalimantan (-2.0 USD/t 

w-o-w). Demand from Indian generators, which replenish stocks amid record high average daily temperatures, continues to support indices of Indonesian material. At the same time, pressure on quotations is exerted by low demand among Chinese consumers, caused by high prices and competition from Russian suppliers.


Australian metallurgical coal index rose above 510 USD/t. Nevertheless, lack of confidence regarding future demand for steel resulting from economic consequences of combating COVID-19 in China may put pressure on quotations in the medium term.