Asia-Pacific coal prices hit 1-month high

Asia-Pacific benchmark coal prices have risen to one-month highs as European buyers continue to scour the global market for supplies to replace embargoed Russian tonnage, analysts said on Thursday.
Broker Global Coal’s Newcastle index, a reference price for high-grade (6,000 kcal/kg) Australian coal, was assessed last up 16% on the week at USD 333.75/t – its highest since 16 March.

“All this tightness in the high calorific-value [CV] market is due to Europe,” said a coal analyst with a Singapore-based trading house.

EU nations will no longer permit the import of Russian coal from 10 August, in response to the country’s invasion of Ukraine, which has left buyers scrambling for alternative supplies, including from Australia. Economic analyst firm FocusEconomics also said the ban was “boding well for Australian coal demand and boosting prices in turn”. Furthermore, the first analyst noted there were ongoing weather-related constraints to exports from Australia, which had exacerbated the market tightness.

Coal exports from the key Australian port of Newcastle declined by 6.2% in the first quarter, after widespread flooding impacted mining and logistics operations, Montel reported. The gains came despite a weaker Chinese market, where lockdowns to contain the spread of the coronavirus continued to impact energy demand. As such, the Zhengzhou exchange’s most liquid thermal coal contract, for May, settled last at CNY 802.40/t (USD 126/t), down by a marginal 0.9% on the week.
Indian demand
Elsewhere, Indian buyers had largely remained aloof from the market in recent weeks, deterred by high prices, but were showing signs of returning. Stocks at Indian power plants were pegged last down 5.3% on the week at 23.4m tonnes – the lowest since late-December – Central Electricity Authority (CEA) data showed.

“Indonesia is producing at full blast now,” the analyst said, regarding the world’s leading thermal coal exporter, and also a key supplier of low-CV coal to the Indian market.“I think the low CV market is starting to look weak and the Indians will want to feast soon,” he said.

“[But] that is not really supportive, as they will just clear excess tonnes that were supposed to go to China, but were not needed,” he added.