Over the past week on the European market there was a significant growth in quotations of thermal coal above 420 USD/t amid the ongoing rise in prices for electricity and gas, caused by reduced Russian supplies as a result of scheduled and unplanned outages of Nord Stream-1. Another driver of growth in coal indices was the plan of European countries to intensify the use of coal-fired generation. Also, the load on thermal power plants increased due to weather conditions in Central Europe, where temperatures exceeded 40°C on June 18-19.
Coal prices in Europe again surpassed the historic high fixed at the level of 417 USD/t in early March 2022. Gas prices rose 15% to 1,385 USD/1,000 m3 (+185 USD/1,000 m3 w-o-w). German Minister for Economic Affairs and Climate Protection Robert Habeck acknowledged that the situation with the country's winter gas reserves remains critical and called for gas economy and the extended use of coal. In response to this situation, on July 08, 2022, Germany will vote on a bill to restart coal-fired power plants with a combined capacity of 10 GW. At the same time, Gazprom is not expected to enhance its supplies via Nord Stream-1, since Siemens because of the anti-Russian sanctions is still unable to return a turbine to Gazprom after it was repaired in Canada.
South African high-CV material surged above 360 USD/t, following the European market quotes
In China, spot prices for 5500 NAR corrected down to 187.5 USD/t FOB Qinhuangdao. Decrease in steam coal quotations on the Chinese domestic market resulted from the production growth in key Chinese coal mining provinces as well as price restrictions, introduced by the Government. In addition, a significant deterioration of weather conditions, including floods in the central and southern regions of the country had a negative impact on the recovery of economic and industrial activity last week.
Since the start of the year, Chinese authorities have approved the construction of 28 new coal-fired power plants with a capacity of 37 GW, compared to 33 GW for the whole 2021. The new capacities, expected to be commissioned in 2024, are estimated to consume at least 74 mio t of coal per year. China currently has about 1,000 GW of coal-fired power plant capacity.
Australian thermal coal indices strengthened considerably to 400 USD/t amid growing demand on the European market. The state of New South Wales, which produces mostly steam coal, is considering measures to redirect some of its coal exports to the domestic market to combat the energy crisis.
Indonesian 5900 GAR was trading at 193 USD/t FOB Kalimantan, remaining under pressure due to low demand from Chinese buyers, that also linked to the availability of supplies from Russia at a discount. Indian traders are also taking a wait-and-see approach ahead of Coal India's (CIL) tender to import 8.4 mio t of coal.
Australian metallurgical coal prices continued to drop to the level of 350 USD/t on low trading activity caused by falling steel prices and planned cuts in steel mills production.