For the Quarter Ending March 2024
North America
In Q1 2024, the North American coal market experienced pricing dynamics influenced by various factors beyond the conventional top three. While the overall trend was characterized by price fluctuations, the market situation in the USA showcased the most pronounced changes. The decline in coal prices in the US market was primarily driven by forecasts of warmer weather, leading to a decrease in demand for coal.
The ongoing transition to renewable energy sources and the retirement of specific coal plants further contributed to the reduction in US coal generation. Additionally, the competitive nature of the market, coupled with a decrease in domestic demand and an increase in exports, led to an overall decline in coal prices. It is important to note that the country strategically adjusted its pricing strategy to remain competitive against other importing nations.
Globally, declining coal prices were prevalent as many countries shifted towards renewable energy, and lower demand from the steel market also contributed to the overall decrease in prices. Plant shutdowns were not reported by market participants during this period. In terms of seasonality, the anticipation of warmer weather conditions resulted in reduced demand for coal. Moreover, the decrease in coal prices in Q1 2024 compared to the same quarter last year and the last quarter of 2023 highlights the continued downward trend. The final quarter's price for Brown Coal 13,000 Btu, < 3.0 SO2 DEL Illinois in the USA was USD 43/MT.
APAC
During Q1 2024, coal pricing dynamics in the APAC region were shaped by various factors, extending beyond the usual primary influences. The situation in China was particularly pivotal, where coal prices saw a noticeable decrease of 0.8%. This reduction was linked to several key factors including the end of colder weather and improved coal transportation logistics. Moreover, a drop in demand on the spot market was observed, driven by an increased supply of imports and the fulfilment of long-term contracts with local miners. The rise in temperatures, coupled with a reduction in industrial activity during the Chinese New Year, also played a role in softening the market. Conversely, in Indonesia, which is the world's largest exporter of thermal coal, domestic consumption showed signs of stabilization. Despite some countries attempting to cut down their long-term dependence on coal, the short-term demand for Indonesian coal remains strong, especially from Asian economies that continue to rely heavily on coal for power generation. In Japan, coal prices were pushed higher by rising domestic demand and higher prices from exporting countries. Notably, the Australian coal market, which serves as a significant supplier for Japan, saw prices spike due to a constricted supply from Indonesia and increased demand from Northeast Asian countries. This demand was further amplified by the sanctions imposed on Russian energy exports. As the quarter concluded, the price of Thermal Coal Ex-Shanghai in China settled at USD 117/MT.
Europe
In the European coal market, prices have generally maintained a steady level but showed an upward trend monthly. However, they remained under pressure due to several factors including anticipated warmer temperatures, rising inventories, a drop in gas prices to two-year lows, and robust renewable energy generation. After an initial price increase in early January, prices began to decline by mid-January, influenced by warming temperatures, reduced coal generation, increasing inventories, as well as low gas prices and high levels of renewable generation. By mid-February, coal quotations continued to hover at 6-month lows despite some strengthening in the broader energy market. This situation was influenced by the implementation of sanctions against major Russian coal companies such as SUEK and Mechel, which paradoxically helped to support prices somewhat due to a strengthening of prices and a reduction in stockpiles. Additionally, prices received some support from short sellers who were covering their positions in the paper market. These dynamics illustrate the complex interplay of geopolitical, environmental, and market factors shaping the coal prices in Europe.
MEA
In Q1 2024, the coal pricing dynamics in the MEA region witnessed fluctuations, with South Africa experiencing the most pronounced price changes. The overall trend in South Africa was bearish, influenced by factors such as diminished demand in Europe, weaker demand from India, and the accumulation of coal stockpiles in India. These factors, coupled with challenges in rail infrastructure and the anticipation of a higher contribution from renewable energy sources, contributed to the decline in coal prices. Additionally, the market situation in South Africa was characterized by moderate to high supply and low demand, driven by elevated temperatures in importing countries and shifts in global energy policies favouring cleaner alternatives. Despite disruptions in supply, prices continued to decline due to abundant inventories in importing countries. The low demand was also attributed to the transition towards renewable energy sources in importing countries. However, the analysis highlighted the downward trend in prices during Q1 2024, with the final quarter's price for Brown Coal FOB Richards Bay in South Africa reported as USD 98/MT. This comprehensive analysis considers various factors beyond the conventional top influences, providing insights into the nuanced dynamics of coal pricing in the MEA region for Q1 2024.
For the Quarter Ending December 2023
North America
In the North America region, the coal market in the fourth quarter of 2023 faced various challenges and changes. One of the primary factors that affected the market was the declining demand from downstream power generation plants. This decrease in demand can be attributed to several factors, including the increasing adoption of renewable energy sources like wind power and the seasonal decline in demand from the power generation sector. Additionally, the changing landscape of the energy sector, with wind power on track to surpass coal-fired electricity generation, has further impacted the demand for coal.
Another significant development in the market was the reduction in coal-related CO2 emissions in the United States. This decline can be attributed to the limited consumption of coal-fired power plants and the increasing use of renewable energy resources. In terms of plant shutdowns, no specific shutdowns or reduced run rates were reported during this quarter in the North America region. Looking specifically at the United States, the country experienced a decrease in coal prices during the quarter. This decline can be attributed to the low demand from power generation plants and the increasing competition from renewable energy sources. The prices of coal decreased by around 12.5% compared to the previous month.
Overall, the fourth quarter of 2023 was characterized by declining demand for coal, increasing adoption of renewable energy sources, and a decrease in coal prices in the North America region. The Dec 2023 price of Brown Coal 13,000 Btu, < 3.0 SO2 DEL Illinois in the USA for the current quarter is USD 44/MT.
APAC
In the APAC region during the fourth quarter of 2023, various factors influenced the coal market, leading to sluggish price trend. Initially, safety inspections in coal production areas resulted in a surplus of thermal coal supply, combined with ample stocks at ports, causing a decline in prices. Concurrently, there was a reduced demand for thermal coal, yet market participants remained cautious with a slow market offtakes.
The availability of competitively priced coal inventory in India further contributed to the decrease in prices. China and India's growing coal inventories, along with increased competition from Australia and Russia, also played a role in lowering Indonesian coal prices. Overseas demand was subdued, mainly attributed to the winter season causing a decline in downstream power consumption. Notably, there were no reported plant shutdowns during this quarter.
Examining price trends, the closing price for thermal coal ex-Shanghai in China stood at USD 132/MT at the end of the quarter. When comparing price percentages between the first and second half of the quarter in China, there was a 2% decrease.
Europe
The European coal market experienced a downturn, with prices falling to USD 125 USD/MT due to factors like weakened demand, full EU gas storage, and lower electricity prices. This marks a departure from the trend where Europe had been gradually moving away from coal and adopting natural gas and renewables.
In response to sanctions implemented in August 2022, the United States witnessed a substantial 22% surge in coal exports to Europe, effectively substituting Russian supplies. Positioned as a key swing supplier in global steam coal markets, the U.S. strategically redirected its steam coal exports to Europe. Adequate product availability and sluggish market offtakes remain the primary reason for the decline in the price trend for Q4 2023.
The price of coal declined with slow market offtakes and a rise in the inventory level. Exports of coal from Australia and the USA remain sluggish with limited inflows of cargos and low market purchases for the fresh stocks. Price dynamics shows a downward trajectory, although remained curbed amid producers’ efforts to bear low production cost.
MEA
In comparison with the previous quarter, Q4 2023 coal market experienced several significant factors that influenced strong pricing trends. The most notable impact was the ongoing labor strike at key coal export facilities, which disrupted the supply chain and limited the availability of coal in the market. This strike added volatility and uncertainty to the market, as companies struggled to meet increasing wage demands while maintaining economic stability. Additionally, the surge in global demand for coal, particularly from Europe, played a pivotal role in driving up prices with healthy market exports. The impending winter season in Europe led to a rapid rise in power generation, prompting an increased need for coal.
In South Africa, which experienced the most significant changes in pricing, the quarter saw a incline in coal prices by 2.4% compared to the previous quarter. This incline can be attributed to the bullish sentiment in the global coal market, with healthy industrial demand and a notable surge in renewable energy and nuclear output.
South Africa still faced challenges in meeting the growing demand for coal, both domestically and from overseas markets. The availability of coal in the global market tightened, leading to a scarcity that further impacted pricing trends. The quarter ended with the price of Brown Coal FOB Richards Bay in South Africa at USD 100/MT.
For the Quarter Ending September 2023
North America
The third quarter of 2023 witnessed an upward price trend in the US coal market. In August and September, coal prices increased by 1.7% and 4.3% in the US market. This price escalation was attributed to a surge in demand, primarily driven by the downstream electricity sector and heightened international interest. Impressively, the United States has seen its coal exports reach their highest levels since 2018, showing an increase during the first nine months of 2023 compared to the same period in 2022. This substantial growth owes much to the robust demand emanating from crucial consumers such as China, India, and South Korea. The total US exports of coal earmarked for power generation surged to 22.5 million tonnes by the end of September, a noteworthy uptick from the 18.3 million tonnes recorded in the corresponding period last year. However, in the first month of this quarter, the price of coal decreased by around 6.5%. This decline was attributed to multiple factors, including a reduction in coal-fired power generation due to an abundant supply of coal within the domestic markets. The growth of clean energy alternatives, driven by environmental concerns, has notably contributed to the structural decline of coal usage in these regions.
Asia
The third quarter of 2023 witnessed an upward price trend in the Asian coal market. In July and August, coal prices increased by 5% and 19% in the Australian market. This escalation was attributed to the scarcity of products within the country, a consequence of intensified demand. The La Niña weather phenomenon has wreaked havoc across New South Wales, leading to considerable distress for coal operators in the region. Whitehaven, an Australian coal company, finds itself among the affected entities, having recently revised its production forecasts downward due to disruptions caused by floods and substantial rainfall. However, the price of the product declined by around 6% in the last month of this quarter. This decline can be attributed to relatively stable supply and weaker demand conditions, leading to a modest but discernible reduction in coal prices. However, it's crucial to note that there were potential upside risks associated with this trend, primarily stemming from unpredictable weather events and ongoing conflicts in the Black Sea region, which impacted global energy markets.
Europe
In the third quarter of 2023, the European market experienced a bullish market sentiment as the price of the product increased in the overseas market such as in the USA and South Africa. In the last two months of this quarter, prices increased in the region due to increasing demand from the downstream electricity sector and heightened international interest. The supply of the product was low in the region as a hurricane led several major parcel delivery companies to temporarily close their facilities during the storm's passage. Even after the storm had passed, these companies continued to experience delays and service disruptions, particularly in the affected areas of Florida and Georgia. These logistical challenges further exacerbated the supply issues in the European coal market. However, in the first month of this quarter, the price of coal decreased due to the ample availability of the product in the region. The supply of the product was not in the exporting countries as the La Niña weather phenomenon has wrought havoc across New South Wales, Australia, leading to considerable distress for coal operators in the region.
Middle East
During the third quarter of 2023, there was an upward price trend in the Middle East coal market. In August and September, the price of coal increased by 7% in the South African market. The demand for the product from overseas improved, while the supply was low; this high demand over low supply supported the price trend for the product. Additionally, The Southern African Development Community (SADC) is grappling with a severe energy crisis. Governments across the region have been struggling to ensure a consistent electricity supply, which is essential for economic growth and regional integration. Historically, the SADC region has faced difficulties in providing electricity to its population, particularly those in remote areas lacking basic infrastructure. Only about 50% of the SADC region has access to electricity, highlighting the urgent need for increased electrification efforts. Electricity outages, stemming from poorly maintained infrastructure and a slow transition to renewable energy sources, have exacerbated the energy crisis. These outages affect access to electricity and threaten to drive many further into poverty due to hindered economic growth. However, the price of the product decreased by around 6%. This drop was linked to various factors, including a decrease in the use of coal for generating power locally. This was due to having plenty of coal available within the country. The shift towards cleaner energy options, motivated by environmental considerations, has significantly contributed to the decreasing use of coal in South Africa. Moreover, Exxaro Resources, a major South African coal miner, reported a drop in both its production and sales due to lower local demand, while ongoing logistical issues with rail transportation continued to impede coal exports.
For the Quarter Ending June 2023
North America
In the second quarter of 2023, the US Coal market experienced a bearish trend. In both the first and last month of the quarter, Coal prices declined by approximately 8% and 5.5%, respectively. This price drop was primarily attributed to a surplus of brown Coal supply in the US market and a low demand from overseas. The ample availability of brown Coal led to downward pressure on prices. Moreover, the mining and exploration sector experienced a boost in activity during April and May 2023, which further contributed to the increased supply of Coal in the country. This surge in mining and exploration was seasonal, adding to the already abundant Coal supply. However, in May 2023, there was a slight recovery in US Coal prices as they increased 3.3% during this month. The stability of demand for Coal from overseas markets, coupled with high demand from the downstream steel and power production industries, contributed to this positive momentum. Notably, the summer season saw the highest point of US electricity generation from Coal, aligning with the peak demand for electricity driven by the need for air conditioning. Additionally, there was a smaller peak in winter when certain regions of the country relied on electric heating devices such as heat pumps, electric radiators, space heaters, and other equipment to warm buildings.
Asia
The second quarter of 2023 witnessed a downward price trend in the Asian Coal market. During the months of April, May, and June 2023, the price of Coal in Australia experienced a significant decline. Specifically, the price of Coal in Australia decreased by approximately 1.7%, 17.4%, and 13.6% in April, May, and June, respectively. This downward trend can be attributed to several factors. The decline in the price of Coal in Australia can be attributed to the improvement in the mining industry during this period. The ideal hot and dry weather conditions for mining operations, influenced by the El Niño effect, allowed for increased productivity in the Australian mining sector. As a result, the increased Coal supply led to a decrease in prices. Another significant factor that affected the Asian Coal market was the approval of a new Coal mine in Central Queensland, known as the Isaac River Coal Mine. The Australian government's approval of this mine further strengthened the supply of Coal in the Asian and global markets. The increased Coal production added to the bearish sentiment and contributed to the declining prices. Despite the decline in prices, the demand for Coal from Asian countries remained stable during the second quarter of 2023. However, the market experienced an oversupply situation as the supply of Coal was high. This oversupply and steady demand created a bearish trend in the Asian Coal market.
Europe
During the second quarter of 2023, the European Coal market faced a bearish trend primarily due to the availability of cheaper imported products from countries like Australia and Indonesia. Coal prices in Australia saw a decline of approximately 1.7%, 17%, and 13.6%, while in Indonesia, they decreased by around 6%, 22%, and 7%. This sudden drop in Coal prices resulted from an oversupply of Coal in comparison to the relatively stable demand. The energy industry in Europe was actively transitioning towards renewable energy sources to achieve carbon neutrality, which necessitated a significant reduction in Coal consumption. The oversupply of Coal in the global market and a stable demand contributed to this situation in Europe. Additionally, Seaborne thermal Coal prices in Asia reached their lowest point in two years due to weakened demand in Europe and declining prices of liquefied natural gas (LNG), despite strong demand in the primary importing region. The major grades of thermal Coal exported by top producers Indonesia and Australia continued to experience losses during this period.
Middle East
The South African Coal market faced a bearish market situation throughout the second quarter of 2023. This was primarily due to the abundant availability of Coal products both in the region and the international market. The prices of Coal experienced significant declines during this period, with decreases of approximately 4% in April, 22% in May, and 1% in June 2023 in the South African market. The market was further impacted by the challenges faced by the state-owned electricity company, which struggled with a fleet of dilapidated and non-operational Coal-fired power plants. These plants failed to generate sufficient power, resulting in scheduled blackouts across the country. To address this issue, the decision was made to close down a Coal-fired power plant and replace it with a solar, wind, and battery storage facility. One such transition was observed at the Komati Power Station in Middelburg, South Africa, in June 2023. This decline in demand from downstream power plants also contributed to the overall bearish trend during this quarter. As the quarter drew to a close, the price of Brown Coal FOB Richards Bay (South Africa) settled at approximately USD 99/MT.
For the Quarter Ending March 2023
North America
The first quarter of 2023 saw a decline in Coal prices on the American market. At the end of the quarter, the price for brown Coal FOB Norfolk (USA) was estimated to be USD 135/MT. However, the United States saw an 8% decrease in coal consumption in this quarter as a result of less pronounced natural gas price increases than in Europe. This made it more difficult for the United States to switch from Coal to gas for the purpose of producing electricity. In fact, the price of coal futures is considerably lower in 2023 than it was in 2022. However, further trade diversions could impede the decline in coal prices by raising transportation costs.
APAC
Coal prices in the Asia-Pacific region have drawn contradictory responses during Q1 2023 as a result of China's market experiencing a major increase in Coal supply despite low demand, which led to a decrease in pricing. Furthermore, the performance of the strong dollar put pressure on energy prices, lowering their value. Signals of diminishing worldwide fuel demand, which had a detrimental effect on Coal prices in the APAC market, were another indicator of the economic slump. The downstream chemical industries did not have much demand in the Chinese market. Prices dropped in the worldwide market, which affected how much-imported cargo would cost; in the Chinese market, the price of Thermal Coal Ex Shanghai (China) was assessed at USD 138/MT.
Europe
During the first quarter of 2023, Coal prices in the German market experienced conflicting sentiments as the product's supply increased as a result of an increase in imports from the Middle East. Another factor that impacted the German Coal market was a strike by workers at the Hamburg port and several protests in other European nations. Due to declining energy prices balancing increased upstream crude oil prices brought on by the sanctions against Russian imports, the European market had a moderate supply of Coal. Across EU nations, the decline in Coal was not consistent. The largest annual decline in coal consumption was recorded in Germany and Poland, but increases were also recorded in Italy, Finland, and Hungary.
