Over the past week coal quotations in Europe fell below 375 USD/t, despite high volatility on the electricity and gas markets and the suspension of Nord Stream-1 for a three-day maintenance, starting from August 31, 2022.
The indices were negatively affected by the decision of the European Commission to reform the electricity market by taking measures to reduce the impact of rising gas prices on electricity tariffs. In the long term it is planned to reach the electricity price, reflecting the cost of cheaper RES. Record high coal stocks at ARA terminals (more than 8 mio t) also put pressure on coal quotes.
Prices for High-CV South African 6000 coal adjusted below 335 USD/t, following European indices. Shipments of South African material via alternative export routes, other than Richards Bay, are gaining momentum. Market participants report growth in transshipment volumes through the ports of Durban (located south of Richards Bay) and Maputo (Mozambique).
Russian material, which was previously supplied to European cement manufacturers and steel mills, is being redirected to alternative markets, in particular to sponge iron producers in India. After the European embargo went into effect, some consumers in Brazil, Egypt, Taiwan and other countries, that closely cooperate with Europe and the United States, began to refuse shipments of Russian coal because of concerns over secondary sanctions. Indian steelmakers are interested in Russian material 6000 because of its high carbon content, resulting in the burning of a lower volume of coal compared to South African Medium-CV. Currently the quotes for the Russian material are at the level of 185-190 USD/t CFR India.
In China, spot prices for 5500 NAR at the port of Qinhuangdao strengthened to 183 USD/t over the week. On the Chinese domestic market coal indices continue to climb amid production and logistics constraints in a number of mining regions, as well as stronger demand from the cement and chemical industries, trying to build up stocks ahead of September-October. In the Shenmu region of Shaanxi province, 30% of production units were shut down after an increase in Covid-19 infections was detected, that also limited the transportation of coal to neighboring regions. The Daqin railway line, which connects the mining provinces with the port of Qinhuangdao, is expected to undergo maintenance work next week.
Indonesian 5900 GAR traded at 179 USD/t on increased demand from Chinese consumers.
The price for High-CV Australian 6000 coal settled below 440 USD/t FOB.
Australian metallurgical coal index remains near 275 USD/t mark, continuing to strengthen as some Australian PCI and semi-soft material is shifted to the thermal coal market owing to higher margins.