International thermal coal prices fluctuated towards a downward trend during the past week with weak demand from Chinese, Indian and European buyers, although high-CV thermal coal supply from Australia, South Africa and Russia tightened, somewhat supporting the market.

 

Supply Side

Indonesia Earlier last week, Indonesian thermal coal prices mostly inched up, driven by increased tender inquiries and winter storage demand from Chinese power companies. However, the prices faced growing downside pressure as the Chinese domestic market declined.

 

As of late last week, offer prices for Indonesian Panamax 3,800 Kcal/kg NAR stood at $61-62/t FOB, flat compared to the previous week.

 

On November 24, the CCI import 3800 index for Indonesian 3,800 Kcal/kg NAR coal stood at $59/t FOB, a $0.5/t uptick from the previous week but down $2/t from the previous month; the CCI import 4700 index stood at $83.7/t FOB, up $0.5/t week on week yet down $2.3/t month on month.

 

Last week, Indonesian coal market remained range-bound following the unstable Chinese domestic market, but the offer prices from overseas miners maintained generally steady. By contrast, demand from Indian buyers weakened due to India's domestic coal production ramp-up and stock build-ups at power plants.

 

Chinese consumers also became cautious about procurement for Indonesian coal as China's market cooled down late last week, curbing the rise of Indonesian coal prices.

 

Russia Last week, other exporters increased coal deliveries, weighing on Russian coal exports. Nevertheless, participants expected the prices to be shored up in the short run by Chinese restocking demand for the winter peak season and Russia's supply tightness at export ports.

 

As of late last week, offer prices for Russian 6,000 Kcal/kg NAR thermal coal at Eastern ports fell $4.5/t compared to the previous week to around $114/t.

 

On November 24, Sxcoal assessed Russian 5,000 Kcal/kg NAR thermal coal at $88/t FOB Far East ports, down $2/t from a week ago; Russian 5,500 Kcal/kg NAR coal was assessed at $100/t, also down $2/t.

 

 

Australia Prices for Australian thermal coal edged down with lower demand in the seaborne market. As of November 24, Newcastle spot thermal coal was priced at $121.5/t, a decrease of $3.5/t from the previous week and a drop of $15.5/t from the previous month.

 

Climate change activists from Rising Tide disrupted operations at Australia's largest coal export port, Newcastle port, on November 25. Insiders predicted a total 500,000 tonnes of cargo for export to be prevented during the 30-hour blockade. It is understood that more than 100 people were arrested when they refused to leave after the protest.

 

Furthermore, participants has taken a cautious approach to coal trading, due to the decline in Chinese coal prices and the lack of progress in negotiations between Australian suppliers and Japanese consumers to determine the benchmark price for coal contracts from October 2023 to September 2024.

 

As a result, Glencore might have priced coal shipments to Tohoku Electric Power in October based on indices rather than fixed prices.

 

South Africa South Africa's thermal coal prices encountered pressure last week from weak European demand and a general downward trend in international prices. However, prices were partly supported by logistical constraints at South African coal ports, with that for South African 6,000 Kcal/kg NAR thermal coal still above $110/t.

 

As of November 24, the Richards Bay Coal Terminal (RBCT) thermal coal rose $2.2/t week on week to $112.2/t FOB, a decrease of $14.3/t compared to the previous month.

 

Rail-shipped coal unloading at the RBCT stood at 980,000 tonnes over the week ending November 19, essentially steady week on week; coal inventories came in at 3.6 million tonnes as of the last weekend, notching a new high in the past seven months.

 

Demand Side

China Chinese yuan strengthened and cold weather boosted demand for thermal coal, leading to more imported coal tenders at Chinese power plants last week. However, imported coal inquiries once again declined as the domestic market experienced a downturn nearing the weekend.

 

As of late last week, the lowest bids for imported 3,800 Kcal/kg NAR thermal coal were basically steady from the previous week at 554-562 yuan/t, DDP with VAT.

 

On November 24, Sxcoal assessed 3,800 Kcal/kg NAR coal at $68.5/t CFR South China, up $0.5/t from a week ago; the 4,700 Kcal/kg NAR coal was assessed at $91.5/t, also up $0.5/t week on week; cargoes of 5,500 Kcal/kg NAR coal were offered at $108.5/t CFR, flat week on week.

 

 

A Chinese trader said that the cold weather is stimulating coal consumption, leading power and heat producers in the northeastern region to potentially increase their procurement of coal from Indonesia. Power plants that faced insufficient supply of domestic coal, in particular, may opt to increase their imported coal inquiries.

 

However, plants in the southern and coastal regions experienced stable daily consumption, with slower demand growth. As a result, some traders adopted a wait-and-see approach. The general market outlook is bearish due to lower bidding prices from utilities and weakening market sentiment. Participants anticipated a relatively stagnant price situation in the short term.

 

Japan and South Korea Japan's coal-fired power capacity in operation is expected to be 34.5 GW in the week ending November 19, up 1% on the week but down 7% year on year.

 

According to a recent forecast by the Japan Meteorological Agency, average temperatures in most parts of Japan are expected to be higher than usual from December to February, which would exert downward pressure on local coal consumption and demand for spot coal.

 

Average electricity demand in Japan was 35.7 GW over November 20-26, up 3% from the previous week but down 5% year on year, showed data from Japan's electricity transmission system operator.

 

According to data from South Korea's power transmission system operator, from November 20 to 26, the expected operational coal-fired power capacity in South Korea was 26.6 GW, slightly higher than the previous week's 26.4 GW.

 

As of November 23, the average peak power demand in South Korea remained stable week on week, at 71.5 GW, 3% lower than the average level for the past five years. South Korea has experienced higher electricity demand than seasonal levels over the past two weeks impacted by cold air.

 

Europe Last week, the European thermal coal prices continued to decline, falling below $120/t, amid unfavorable fundamental factors, such as low demand, full EU gas storage facilities and lower electricity prices.

 

As of late last week, 6,000 Kcal/kg NAR thermal coal prices in the European ARA (Amsterdam, Rotterdam, Antwerp) region dropped $2/t to $119/t.

 

The Association of German Coal Importers (VDKi) called for an extension of the operation of coal-fired power plants, which were originally implemented to address the energy crisis last year but are scheduled to conclude in March 2024.

 

VDKi believed that this request is based on the uncertainties in energy markets caused by the situation in the Middle East and Ukraine, as well as the volatile prices of liquefied natural gas (LNG). VDKi anticipated that Germany's coal imports will reach 21 million tonnes by the end of 2023, a decrease of 12 million tonnes compared to 2022.

 

Natural gas quotes at the European benchmark TTF hub fell to $505.8/1,000 m3, down $15.2/1,000 m3 from a week earlier, owing to EU's filled gas storages and a 7% increase in supplies from Norway.