Newcastle thermal coal prices have declined for four consecutive days and are increasingly possible to fall further, as the overall supply-demand relation in the broader energy market has eased.

 

The January contract on the ICE closed December 19 at $140.25/t, down 0.71% from the previous session. Insiders expected the prices to move below the threshold of $140/t soon.

 

December is usually the month with the lowest trading volumes, and spot activity in the physical thermal coal market also experiences a significant slowdown.

 

India, the world's second largest coal importer, scaled back overseas purchases this year as the country has stepped up efforts in domestic production.

 

Data from local industry agency CoalMint showed coal vessel arrivals at Indian ports dropped by 14% in the first half of December to 9.36 million tonnes, against 10.84 million tonnes in the same period of November.

 

State-owned Coal India Ltd., which provides 80% of India's coal output, saw a 9% rise year on year in November's production, reaching 66 million tonnes, CoalMint data showed.

 

On the other hand, China, the top coal importer and consumer in the world, has also maintained soft buying interest in seaborne coal recently, even as wintry weather drove up coal burns at power plants.

 

The key reason behind the weak demand was not only China's elevated coal stocks at ports and power plants but also ample domestic supplies under term contracts.

 

China's state planner NDRC said coal stocks at grid-connected power plants totaled over 200 million tonnes, sufficient for 26 days of use.

 

Amid sufficient availability of spot coal in China, the domestic thermal coal are now generally priced at around 950-960 yuan/t FOB with VAT at northern ports. The less volatility in the domestic market has weighed on prices in the seaborne thermal coal prices.

 

Meanwhile, demand remained tepid from European, where power producers preferred to use gas instead of dirtier coal as natural gas are well supplied at a comfortable price.

 

The European Union on December 19 agreed to expanded its energy emergency measures for one more year until January 2025, including a price cap of 180/t.

 

On December 19, the Dutch TTF gas futures for January delivery traded at 34.5 euro/MWh, down 5.7% from a day earlier.