The global thermal coal market recently experienced a surge due to escalating supply concerns, partly driven by a rush among coal buyers for ex-Russian cargoes following Western countries’ new sanctions on Russia since late February this year, Mysteel Global found. In addition, the surge in global gas prices has also fueled more worries over energy supplies around the world in the near future, an industry insider pointed out.
For example, offers prices for Australian 6,000 kcal/kg NAR thermal coal have soared to $127/tonne FOB as of March 7, higher by a marked $4/t compared with the week prior. In parallel, offers for the same calorific-value (CV) coal in Europe jumped by a larger $9/t on week to reach $104/t CIF.
Russian coal buys curbed by payment restrictions
The key driver of the surge was a tightening coal supply in international markets as buyers started shunning procurements of Russian coal cargoes in face of the US’ February 23 announcement of over 500 new sanctions against Moscow, including measures against the country’s National Payment Card System JSC, banks, and other individuals and companies involved in the Russian metals and mining sector.
Notably, Siberian Coal Energy Company (SUEK), Russia’s largest coal producer and exporter, and the large steel, metals and mining company Mechel Group were among those on the sanction list. The restrictions on payment systems for these Russian coal giants have steered appetite from many global buyers away to other suppliers lately, which has apparently squeezed coal availability in the alternative markets, Mysteel Global noted.
This was evidenced by a 12.1% on-week decline in Russia’s coal shipments to other nations totaling 1.94 million tonnes over February 26-March 3, which also represented a 39% slump on yearly basis, Mysteel’s tracking data showed.
On the other hand, Moscow’s recent decision to re-impose its flexible tariffs, ranging from 4-7% based on the rouble-dollar exchange rate, on coal exports from March 1, which will be effective until February 28 2025, has also put a bridle on some buying plans, fostering a thickened wait-and-see sentiment among buyers, Mysteel Global learned.
Limited availability of Indonesian coal
In parallel, the Indonesian coal market also saw prices firming in recent weeks, as the possible supply disruptions due to the country’s month of Ramadan starting on March 11 have spurred buyers’ active replenishments of the fuel in advance, sources said.
Apart from the upcoming Ramadan, frequent rains in Indonesia lately have already tightened its thermal coal supplies to overseas markets, said a trader based in Southeast China’s Fujian province.
Many Chinese coastal power groups were lately keen on seeking Indonesian low-CV thermal coal cargoes, pushing Indonesian miners’ offers up to $60-61/t FOB for the 3,800 kcal/kg NAR coal, for example, equivalent to Yuan 576/t ($80.1/t) CFR China basis, Mysteel has learned.
Impact on China’s coal imports
However, for Chinese coal buyers, the higher prices of imported thermal coal, together with the rising international ocean freight rates, are escalating their final costs, which led the competitiveness of imported coal as compared with domestic-origin cargoes to gradually diminish, Mysteel Global noted.
This trend becomes more apparent as Chinese coastal power plants appear less receptive to current aggressive offers by foreign miners, considering their less urgent restocking needs amid modest levels of power loads.
Mysteel has learned that the average purchasing prices of Indonesian 3,800 kcal/kg NAR thermal coal were currently in a range of Yuan 560-565/t, equivalent to $68.9-69.5/t CFR China and without VAT. The price is only Yuan 0.02/t cheaper than China-origin thermal coal on the basis of per Kcal/kg of calorific value, Mysteel understands.
Written by Tammy Yang
