Coal Prices
- Premium Low Vol (FOB Australia) $335.75/mt (-0.50)
- CFR China PLV equivalent (Jan ’23) $333.00 (-1.00)
- PCI (FOB Australia) ~$188.70 (unch)
- Semi-Soft (FOB Australia) $154.00 (unch)
- Low Vol HCC (USEC) $260.00 (-9.00)
- High-Vol A (USEC) $260.00 (-15.00)
- High-Vol B (USEC) $230.00 (-13.00)
- CFR South China (5,500) $108.00/mt, (-0.30)
- Kalimantan (4,200) $56.50 (-0.50)
- FOB Newcastle (6,000) (Jan ’23) $133.50 (-2.15)
- FOB Newcastle 20% Ash (5,500) $94.90 (+0.35)
- CFR India West (5,500) $109.05 (-0.35)
- CIF ARA (6,000) $108.95 (-3.10)
- Richards Bay (5,500) $85.95 (-0.05)
- Baltimore 3% Sulfur (6,900) $84.60 (-0.40)
European Steelmakers are Restarting Blast Furnaces
In the first quarter of 2024, European steelmakers are resuming production, which was reduced in mid-2023 to stabilize steel prices. This production cut helped increase prices. The lack of competitive imports in January, due to filled safeguard quotas and increased freight costs and lead times caused by issues in the Suez Canal, also contributed to positive market sentiment. Key mills like ArcelorMittal, Salzgitter, Liberty, and Tata Steel had temporarily shut down blast furnaces.
Salzgitter restarted its Blast Furnace A in Germany, aiming for low-carbon emission steelmaking by 2033. ArcelorMittal restarted mills in Belgium and Germany, with no clear restart date for its furnace in France. Liberty and Tata Steel have varying statuses of operation across their European plants, with some still idled. British Steel in the UK is bringing its Queen Bess furnace back online for February, while retiring the Queen Victoria furnace.
Despite the reduced production in January-November 2023, causing a 6.3% decrease in crude steel output, hot-rolled coil prices in Northwest Europe have increased, with mills targeting higher prices due to full order books. However, there’s concern that this price rise might be short-lived due to the lack of demand recovery and the resumption of furnace operations. While some are cautious about a potential price drop, others believe a sustainable uptrend is possible, given controlled production rates and gradual furnace ramp-ups. Read More.
Thermal Coal News
Bearish: The Asian thermal coal market is experiencing declining demand, especially in low- and mid-calorific value (CV) grades, leading to falling prices. This trend is driven by sufficient supply from Indonesia and tepid market interest. While Indonesian low-CV coal prices are dropping, there is some optimism for a potential uptick around mid-January, particularly from Chinese buyers ahead of the Chinese New Year. In India, there’s increased industrial activity, especially in steel and cement, boosting coal imports, but buyers are cautious with price deals. Indian power plants have adequate coal stock, reducing immediate demand pressures.
Neutral: India-delivered petcoke prices stabilized after an eight-week decline, influenced by steady freight rates and FOB offers from US refiners. Volatility in freight rates was due to demand-supply dynamics and logistical issues at the Panama Canal and the Red Sea corridor. Despite recent reductions in freight costs, concerns over the Red Sea crisis linger. Demand in India shows signs of recovery, though it remains muted. Indian petcoke producers have lowered their prices in response to global market trends, while some market participants expect construction activities to increase from mid-February, potentially impacting demand.
Australia’s Port of Newcastle reported a significant increase in coal export volume in December 2023, reaching 14.7339 million tons. This figure represents an 11.24% increase year-on-year and a 14.45% increase month-on-month, marking the highest level since January 2021. Historically, the port’s annual exports exceeded 150 million tons from 2019 to 2021. The downturn in 2022 was influenced by China’s informal restrictions on Australian coal and the Russia-Ukraine conflict. In early January, 27 coal ships were waiting at Newcastle Port, indicating continued high export volumes.
Metallurgical Coal News
Neutral to Bearish: Asian metallurgical coal prices slightly decreased on January 10, reflecting market caution. The benchmark Premium Low-Vol Hard Coking Coal (PLV) was assessed at $335.75/mt FOB Australia, down 50 cents, while the delivered price to China was $2/mt lower at $325/mt. Bids for Australian coal ranged from $310-$320/mt, with no significant trades reported. In China, a second round of price cuts in metallurgical coke was completed, indicating a softening market. Shanxi PLV prices also corrected downwards, with domestic options emerging as cheaper alternatives to imported coal. The market remains in a state of equilibrium, with limited price reconciliation between buyers and sellers.
Bearish: On January 10, Atlantic metallurgical coal markets experienced a decline in US coking coal prices, influenced by weaker demand in Asia and the US steel market. US high-volatile (high-vol) coal prices dropped due to reduced demand and availability for loading in the US. The demand for US low-volatile (low-vol) Hard Coking Coal (HCC) also weakened, with low pulverized coal injection prices. Despite this, the derivatives market showed mixed price movements, with the second quarter remaining stable. Asian buyers are considering alternative sources due to weakening bulk rates from the US and Europe, affecting the attractiveness of US coal. The US High Vol B benchmark dropped, narrowing the spread between high-vol A and high-vol B.
Neutral: Australian seaborne metallurgical coal prices rose on Thursday, driven by a post-market trade of a 40,000 ton Goonyella cargo for February 15-24, sold at $338.15/t FOB. This price increase widened the gap between physical and futures markets, as February futures traded lower at $321.00/t compared to $325.00/t on February 9. Meanwhile, in China, domestic met coal supply is recovering as coal mines resume normal production after achieving annual targets, which could dampen China’s interest in seaborne coal imports.
Aspire Mining’s Ovoot coking coal project (OCCP) in Mongolia can produce premium hard coking coal with high volatile matter, suitable for the Chinese market. This was revealed in a Coal Classification and Value in Use study by SGS-CSTC Standards Technical Services, Tianjin, China. The coal, branded as Toson Coal, is meta-bituminous with moderately high ash and sulphur, low phosphorus, and high caking properties. It’s classified as scarce coking coal by Chinese standards, ideal for coke blends, offering flexibility and cost reduction in coke production. Aspire plans to start construction of the 5.0 mt/y OCCP in late-2024 and begin production by mid-2025, targeting China and Russia via the trans-Mongolian rail network. Mongolia’s coal exports to China significantly increased in 2023.
Bullish: Chinese domestic coking coal supply in November was 39.93 million tons, marking a 3.20% decrease compared to the previous year, while consumption rose to 49.98 million tons, a 7.84% year-on-year increase. From January to November, the coking coal supply totaled 451.95 million tons, slightly down by 0.12% from the previous year, and consumption reached 508.63 million tons, showing a 6.28% increase over the same period.
North Queensland’s three major coal terminals in Australia exported a total of 11.2855 million tons in December 2023, a 5.19% decrease year-on-year and a 2.42% decrease month-on-month. The total export volume for January to December was 133 million tons, a 3.13% increase year-on-year.
- Dalrymple Bay Coal Terminal exported 5.1995 million tons in December, down 4.14% year-on-year and 3.26% month-on-month, with annual exports of 59.1974 million tons, up 12.19%.
- Port Abbott Coal Terminal exported 3.1186 million tons in December, up 27.08% year-on-year and 4.03% month-on-month, with annual exports of 34.6621 million tons, an 11.59% increase.
- High Point Coal Terminal exported 2.9674 million tons in December, a 26.28% decrease year-on-year and 7.05% month-on-month, with annual exports of 38.9852 million tons, a 13.34% decrease.
North Queensland primarily exports coking coal. Read More.
Queensland’s coal ship queues remained high in December due to weather disruptions, affecting metallurgical and coal exports from the state’s major ports. The combined December shipments from Hay Point, Dalrymple Bay Coal Terminal (DBCT), Gladstone, and Abbot Point were 17.6 million tons, only slightly higher than in November and the previous December. Vessel queues were significantly above average, particularly at Gladstone and near Hay Point and DBCT. Abbot Point’s queue was more average. The wet season continues in January, posing further challenges. Read More.
Australia’s metallurgical coking coal exports exceeded 13 million tons for the first time in five months in November, driven by strong demand from India and increased shipping in Queensland. Although exports rose by 9.4% from October, they were 5.4% lower than the previous year. Hard coking coal exports totaled 8.65 million tons, up 22% from October but down 4.9% year-on-year. While shipments to India increased, weaker Japanese demand affected overall exports. Read More.
Steel & Iron Ore News
Bearish: Portside prices of imported iron ore in China fell in the week to January 10 due to bearish market sentiment and reduced steel production. Many steel mills began maintenance, lowering blast furnace output, with pig iron production dropping below 2.2 million tons per day. Restocking demand for China’s Lunar New Year slowed as mills completed their stocking. Prices of various iron ore fines like Pilbara Blend (PB), SSF, Jimblebar, and IOCJ declined at different ports including Shandong, Qingdao, Tangshan, Tianjin, Lanqiao, and Lianyungang. Despite a positive implied profit margin for selling dollar-based seaborne cargoes in yuan-based portside markets, the bearish sentiment limited bookings of seaborne cargoes. The premium for portside PB fines at Qingdao port compared to seaborne prices increased to $2.90/t on January 10.
ArcelorMittal’s Bosnian steel plant in Zenica is preparing to resume production after halting operations in November due to weak demand. The restart follows a wage agreement with the trade union, which will also enable the resumption of iron ore deliveries from the Omarsk mines in Bosnia and Herzegovina to the Zenica plant, which has an annual capacity of 1 million tons. Zenica primarily supplies long steel products to the European market.
China’s automobile sales and production both exceeded 30 million units in 2023, reaching record highs with year-on-year increases of 12% and 11.6%, respectively. December saw a 23.5% year-on-year rise in sales to 3.16 million units and a 29.2% increase in production to 3.08 million units. China’s vehicle exports in 2023 rose by 57.9% to 4.91 million units. CAAM forecasts that total auto sales will exceed 31 million units in 2024, with NEV sales expected to reach 11.5 million units. Read More.
Power & Energy News
Bearish: European gas prices approached five-month lows due to ample supply and reduced demand. The Dutch TTF front-month contract traded at EUR 30.66/MWh, close to its lowest level since August. Forecasts of milder weather and sufficient storage contributed to the market’s comfort. European gas storage facilities were at 83% capacity, and Norwegian nominations remained healthy at 353mcm/day. Additionally, there was little risk of a near-term slowdown in LNG availability, as Asian demand for LNG remained weak. Read More.
Shipping & Transportation News
China’s surge in coal and iron ore imports in 2023 is expected to grow the global dry bulk trade by 4.5%. Coal, iron ore, and grain, which form the bulk of seaborne trade, are projected to increase in volume. Iron ore trade is expected to rise by 4.2% to 1.54 billion tons, coal trade to reach 1.335 billion tons, and grain trade to hit 2.13 billion tons. These commodities constitute about 60% of all dry bulk transport, with the remaining 40% comprising smaller commodities. The dry bulk shipping market in 2024 is expected to be influenced by global events and macroeconomic trends. The market is cyclical and will be supported by global economic growth and environmental reforms, but will also face volatility due to uncertainties. Dry bulk cargo ships primarily transport coal, iron ore, and grain, with most of China’s dry bulk cargo shipping being imports.
South Africa’s National Treasury, led by Finance Minister Enoch Godongwana, is assessing the need for a cash injection to fully repair Transnet SOC Ltd., the state port and rail company. Transnet, burdened with a 130 billion-rand debt and operational issues like derailments, equipment shortages, vandalism, and corruption, has affected the economy significantly. The Treasury recently provided a 47-billion rand support package, with half accessible for immediate debt obligations. The decision on further funding will depend on the extent of fixes needed for Transnet, which is crucial for the nation’s logistics and economy. Read More.
Iranian-backed Houthis launched a significant attack with missiles and drones on international shipping lanes in the Southern Red Sea on January 9, but no damage or injuries were reported due to interception by US-led naval forces. This was the largest such attack by Houthis in the Red Sea and the 26th since November. Many ships are now diverting from the Red Sea, increasing voyage times and freight rates. Singapore has joined the international maritime security force, Operation Prosperity Guardian, in response to these attacks, deploying personnel and supporting international efforts to protect shipping lanes.
