Coal Prices
- Premium Low Vol (FOB Australia) $312.00/mt (-3.00)
- CFR China PLV equivalent (Feb ’23) $316.00 (+3.00)
- PCI (FOB Australia) ~$183.00 (-2.00)
- Semi-Soft (FOB Australia) $148.50 (unch)
- Low Vol HCC (USEC) $262.00 (unch)
- High-Vol A (USEC) $260.00 (unch)
- High-Vol B (USEC) $220.00 (unch)
- CFR South China (5,500) $107.65/mt, (+0.50)
- Kalimantan (4,200) $57.05 (-0.20)
- FOB Newcastle (6,000) (Feb ’23) $120.00 (+1.00)
- FOB Newcastle 20% Ash (5,500) $97.25 (+0.40)
- CFR India West (5,500) $110.70 (+0.50)
- CIF ARA (6,000) $104.00 (+1.00)
- Richards Bay (5,500) $82.70 (+3.10)
- Baltimore 3% Sulfur (6,900) $81.10 (unch)
Peabody Out w/ Q4 2024 Earnings
Peabody Energy’s Q4 2023 showed lower-than-expected net income and revenues due to decreased volumes and higher costs. However, 2024 guidance indicates optimism and growth plans. Key highlights: net income $1.33/share, revenues $1.24 billion (down 24% YoY), adjusted EBITDA $345.1 million (down 31% YoY). Seaborne metallurgical segment saw higher volumes, while other segments faced challenges. Management faces inquiries about shareholder returns, cost increases, and operational updates. Clarifications on guidance areas will enhance market understanding. Read More Here.
Key Q4 2023 highlights:
- Net income: $1.33/share, below analyst estimates ($1.34 – $1.44) and significantly lower than $3.92/share in Q4 2022.
- Revenues: $1.24 billion, down 24% YoY.
- Adjusted EBITDA: $345.1 million, down 31% YoY.
- Seaborne thermal: Lower volumes due to train derailment, higher costs.
- Seaborne metallurgical: Higher volumes, lower costs.
- Powder River Basin: Highest quarterly volume in four years, increased costs.
- Other US thermal: Lower sales due to longwall move and low demand.
- 2024 guidance: Strong expectations for all segments, increased CAPEX.
Thermal Coal News
Neutral: Asian thermal coal market awaits demand uptick post Lunar New Year, with mixed sentiments. Cold waves in China spark hopes for a revival, but some remain bearish. Tight February-loading availability noted in Indonesian and Australian markets. Indian buyers cautious due to ample domestic stocks. Rising South African coal supply attracts Indian interest over Australian coal. Chinese buyers favor term contracts amid stagnant index prices. Colombian coal price advantage diminishes demand for Russian spot cargoes.
Asia-Pacific Supramax freight rates rise, driven by robust coal activity. Indonesian Basin sees increased demand, tightening tonnage levels in the Pacific. Rates climb for Indonesia-China and Indonesia-India routes. South Africa experiences upward rate movement due to limited tonnage and strong cargo demand. Persian Gulf to India route limited in fixing information. Pacific Handysize market weakens ahead of Lunar New Year. Alumina freight rates from Australia to China decline.
US Gulf Coast high-sulfur petroleum coke prices halted their four-week rally, remaining steady at $71.50/mt. West Coast prices rose $2.50. Overseas offers affected prices: CFR India offered $119/mt, while Turkey bid $93-$94/mt. US fuel-grade petcoke exports hit a three-year high in December at 3.8 million mt, with India leading consumption at 7 million mt in 2023. Weekly US petcoke exports dropped 26.8% due to absent shipments to Turkey and Mexico, with India receiving the highest volume.
Indonesian thermal coal exports fell 11% month-on-month to 30.07 million tonnes in January 2024, affected by subdued demand from major buyers like India and weather disruptions. Pending production quotas and rainfall hindered output. Shipments to India dropped by 30%, while those to China remained stable. Exports to South Korea surged by 43%, but to the Philippines, they fell by 14%. Port-wise, exports from Muara Jawa more than doubled. With tepid demand and domestic production, Indonesia’s thermal coal exports may continue to decline. Read More Here.
Bearish: Indonesia anticipates surpassing its 2023 thermal coal export record, targeting 710 million mt production in 2024. Despite global efforts to reduce coal usage, rising domestic demand, particularly from nickel smelters, and increased power plant projects are expected to sustain exports. With its unique low CV thermal coal grades, Indonesia remains crucial for China and India, which have yet to reduce coal dependency. Despite price pressures, its geographical advantage and competitive prices are projected to maintain its export dominance. Read More Here.
Asian investors are interested in refinancing Australia’s Wiggins Island Coal Export Terminal (WICET). About $2.5 billion in refinancing is expected, with discussions ongoing between lenders, miners, and investors. Refinancing may allow banks to exit due to ESG concerns, creating opportunities for coal-friendly investors. Recent debt trading in WICET suggests lenders may extend loans. In 2017, WICET owed $3 billion to senior lenders and $1 billion to junior lenders. Rising coal prices make terminal usage financially viable for shippers. Read More Here.
Metallurgical Coal News
Neutral to Bearish: Asian metallurgical coal PLV FOB prices softened as trade slowed on February 7, with two FOB Australia deals closing at $312/mt and $314/mt. Chinese demand tapered due to holiday lull. Coke demand surged. Australian materials faced production and delivery issues, prompting diversification to US products. Indian end-users sought coke over Australian coal, driving a competitive market. Domestic Shanxi PLV remained stable at Yuan 2,500/mt, while the CFR China equivalent decreased to $317.23/mt. Resurgence in Indian coke demand reflected cost-effectiveness and market competitiveness.
Neutral: Seaborne prime hard coal prices in Australia stabilized on February 8, with limited upside. A 50,000 t Goonyella cargo sold at $315.50/t FOB, slightly up from $314.00/t FOB on February 6. An Indian coke tender, due February 9, seeks 25,000-30,000 t of low ash metallurgical coke for March loading. The tender deadline was today, with offers valid until tomorrow, India time.
New Hope Group ups its stake in Malabar Resources to 19.9% (from 15%), with potential to reach 23%, through a $105m investment in a $160m equity raise. The funds will accelerate Maxwell mine development. The deal, closing February 23, involves issuing 88.9 million shares at $1.80 each. New Hope aims to diversify and secure long-term returns. Malabar, focused on Maxwell mine expansion, inherited infrastructure and equity in Port Waratah Coal Services from Anglo American. Read More Here.
Anglo American’s 2023 Queensland metallurgical coal production hit 16.0 mt, a 7% increase but at the lower end of guidance. 2024’s forecast: 15.0-17.0 mt with a $115.00/t production cost. Challenges at Moranbah impacted costs. Grosvenor and Aquila mines boosted Q4 output. Moranbah’s recent production dip contrasts with Grosvenor and Aquila’s increases. In 2023, iron ore production met guidance at 59.9 mt. 2024’s iron ore target: 58.0-62.0 mt with a $37.00/t cost. Manganese ore production slightly declined in 2023. Read More Here
North American met coal production set for potential growth in 2024. Major producers anticipate 6.0-10.4 mt increase, addressing past constraints. Notable contributions from Allegheny Metallurgical’s Longview longwall, Teck’s Elk Valley, Peabody’s Shoal Creek, and others. Challenges like geological issues and labor strikes persist. Market uncertainties and transportation constraints may limit export growth despite increased production. Overall, potential growth is anticipated, particularly in high-vol coal, presenting market absorption challenges.
Steel & Iron Ore News
Bullish: Steel Authority of India (SAIL) plans to invest INR 20-24 billion ($241-289.24 million) in its IISCO Steel Plant (ISP) in Burnpur, West Bengal, to set up a four million tonne/year greenfield steel plant. The new facility will produce high-quality hot rolled coils targeting automotive and API grades. ISP director-in-charge Brijendra Pratap Singh expects board approval shortly, with completion in 3-4 years. This expansion aligns with SAIL’s goal to increase steel production capacity to 35 million tonnes/year and support India’s infrastructure and defense projects. Read More Here
Bullish: Chinese steel producers saw their blast furnace (BF) capacity utilization rate rise for the fifth consecutive week, reaching 83.8%. Daily hot metal output increased by 6,000 tonnes/day to 2.24 million t/d, and operational rates averaged 76.67%. More mills resumed production after annual maintenance, boosting iron ore consumption. However, production growth was slower compared to 2023 due to negative margins and subdued steel demand. Steel trading slowed ahead of the Chinese New Year holiday, but iron ore replenishment continued, leading to increased iron ore inventories. Read More Here
Power & Electricity News
Essar Oil & Gas Exploration and Production Ltd. CEO Pankaj Kalra forecasts Asian spot LNG prices at $7-$10/MMBtu, ideal for India’s energy needs and net zero goals. Despite geopolitical turbulence, gas markets remain resilient. India’s natural gas demand expected to rise 6%-7% annually. Infrastructure expansion and policy reforms drive growth. Essar aims to increase its gas production share in India to 5%, emphasizing coal bed methane potential. Green initiatives include LNG-powered trucks and stations, alongside carbon capture and hydrogen production projects.
