LAUNCESTON, Australia, Jan 30 (Reuters) – Asia’s marine thermal coal markets are losing heat, with both prices and volumes falling as winter demand fades and Europe’s energy crisis subsides.
Prices of the main grades traded for coal used in power plants fell to the lowest in months last week, and to the weakest in a year in the case of one of the main Australian varieties .
Australian coal at the Port of Newcastle with an energy value of 5,500 kilocalories per kg (kcal/kg), as assessed by commodity price reporting agency Argus, fell to $129.87 a tonne in week until January 27, the least of the week until January. 21, 2022.
This grade of coal is mostly bought by Indian utilities, and was the preferred Australian thermal grade among Chinese buyers before Beijing’s unofficial ban on Australian goods, imposed amid a diplomatic row in mid- 2020.
While the Chinese ban has been lifted, it is unlikely that buyers will go back to Australian thermal coal, given the availability of cheaper coal, and of similar quality, from Russia.
The higher quality 6,000 kcal/kg Newcastle grade also fell last week, with the index ending at $307.47 a tonne, the lowest since April and 31% below the record high of $442.89 reached early September.
The price of Newcastle 6,000 kcal / kg physical cargo collected by globalCOAL was even weaker, and ended last week at $ 294 per ton, falling below $ 300 for the first time since April last year.
This grade is most commonly purchased by buyers in Japan and South Korea, usually on a contract basis, meaning that the spot market only accounts for a small portion of overall volumes.
The price weakness was not limited to Australian thermal coal, with Indonesian grades also falling.
Indonesia is the world’s largest exporter of thermal coal, while Australia ranks second and Russia third.
Lower quality Indonesian coal with an energy value of 4,200 kcal/kg ended last week at $80.39 per ton, the lowest since early September.
This grade is preferred by Chinese utilities for its low sulfur and ash content, and is also sought after by Indian power plants as it is cheaper than alternatives from Australia and South Africa.
Russian thermal coal from the port of Vostochny, which is largely being bought from China after Japan curbed imports following Russia’s invasion of Ukraine, is also weakening.
The price fell to $157 a tonne in mid-January, the lowest since December last year.
SLIP VOLUMES
The softer prices for thermal coal are coming as demand for sea freight appears to be weakening among Asia’s top two importing nations.
China, the world’s largest coal importer, is forecast to import 23.96 million tonnes of all grades in January, down from 28.33 million in December, according to data compiled by commodities analysts Kpler. .
If the final January arrivals are in line with Kpler’s estimate, it will be the weakest month for Chinese imports since August.
India, the second-ranked importer, is expected to unload 16.20 million tonnes in January, roughly in line with December’s 16.22 million, but it should be noted that December was the weakest month for -imports from February 2022.
Imports from Japan and South Korea, the third and fourth largest coal importers in Asia, appear to be slightly stronger in January than in December.
However, January is historically a strong month for the two North Asian countries, with imports falling in subsequent months as the peak winter demand period passes.
Overall, the picture from both softer prices and volumes is that Asian coal demand remains solid, but the market froth caused by Russia’s invasion of the Ukraine and the subsequent threat to Europe’s energy supplies appears to be evaporating.
(Editing by Simon Cameron-Moore)
