Coal importers imported coal, Russian coal, or are replacing Indonesian coal; import coal price inversion eases, coal imports are expected to rebound; daily consumption is high due to high temperature, Guangzhou to depot the most obvious, but after high temperature, demand or significantly lower; sea freight charges are rushing higher. Comprehensive view, the steam coal peak season is not prosperous; China’s 363 railroad direct supply power plants stock of coal can be consumed in 23.3 days, after the high-temperature steam coal prices may be under pressure to the downside.
Policy: Neutral China uniformly extended its coal supply assurance policy last winter and this spring until March 2023, fully releasing advanced capacity.
Spot: Neutral Coal sales are relatively flat, with price increases mainly concentrated in Yulin and Shaanxi, while prices in northern Jin and Erdos are still weak.
Inventory: Shortish Terminal force to protect electric coal; due to the high temperature, Guangzhou port inventory dropped significantly, but eight coastal provinces’ inventory but peak season accumulation.
Imports: On the short side, Influenced by the shift of Russian coal to export to China, overlaid with the weakening demand from India, the inversion of Indonesian coal imports eased, especially for medium and low-caliber coal, and the number of coal imports by China coal importers is expected to pick up further.
Demand: biased Although daily consumption in eight coastal provinces increased faster due to high temperature, downstream demand from non-electric coal buyers still has not improved. Demand may fall back again after the high temperature.
Price is not firm in peak season
Steam coal spot closeout price
- China coal importers’ purchasing demand is weak. On the one hand, the rally of the bulk steel market came to an end; on the other hand, precipitation appeared in South China, and the demand for high temperatures is expected to recede.
Steam coal origin price
- Recently, the Steam coal procurement market for China coal importers was lukewarm and relatively quiet, and steam coal prices remained on a weak trend. The supply side continues to run high, while demand shows no apparent signs of improvement for the time being, and downstream coal buyers still focus on just-in-time purchases.
- The price increase is mainly concentrated in Yulin and Shaanxi, while the price in northern Jin and Erdos is still weak.
Steam coal international port coal prices
- After European coal importers reduced Russian coal imports, demand shifted to the United States, Colombia, South Africa, Australia, and other countries. Colombia’s National Statistics Office data showed that in June 2022, Colombian coal exports were 6,256,400 tons, up 16.31% year-on-year and a 125.5% jump from the previous January’s low.
- The recent shutdown of another Nord Stream I gas pipeline turbine has led to a significant drop in pipeline gas supply to Europe and a rise in gas prices in the European region, which has boosted steam coal prices.
Downstream Coal Inventories
- The recent rapid downward movement of inventory at Guangzhou port is mainly due to the high-temperature weather pushing up the demand for coal and low price hoarding by steam coal importers.
- Due to the recent low coal prices and some coal traders and downstream users worried about the impact of the late typhoon season to arrive, coal importers in advance buy stockpiles to prepare for subsequent demand.
- It is expected that after the high temperature subsides, the de-stocking in Guangzhou port will be eased.
- The IEA said in its July Coal Market Report that global coal consumption in 2022 will rise slightly and is expected to return to the record levels of nearly a decade ago. Global coal consumption rebounded by about 6% last year. Based on current economic and market trends, the IEA expects that figure to rise another 0.7% this year to 8 billion tons, matching the annual record set in 2013.
- However, coal imports by China coal importers are expected to increase in the near term due to increased exports of Russian coal to China.
Indonesian coal arrivals
- The price of Russian coal is more advantageous than Indonesian coal, partially squeezing the market share of Indonesian coal, and the Indonesian steam coal market performed coldly during the month.
Steam coal consumption
- In June 2022, global crude steel production in the 64 countries included in the World Steel Association statistics was 158 million tons, down 5.9% year-on-year. China’s crude steel production in June was 90.7 million tons, down 3.3% year-on-year.