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ASIA-PACIFIC COAL – Newcastle finds support above USD 130/t

(Montel) The Pacific basin’s leading thermal coal index rose 1% this week as cold weather in Europe provided temporary support to a seaborne market under pressure from slackening demand.

The Global Coal Newcastle index last settled at USD 134.02/t, up USD 1.49 in the week through to Wednesday. Last Friday it hit USD 131.99/t, its lowest since 1 December.

Australian coal exports remain around USD 30/t higher than front-month delivery to northwestern Europe on the Ice Exchange.

“We are seeing the cold spell translate into higher coal-burn in Germany but with temperatures to switch above normal from next week, the underlying fundamentals for coal demand remain soft,” said Toby Hassall of LSEG in Singapore.

Elevated nuclear generation, mild temperatures and falling LNG prices weighed on the demand outlook for high calorific Australian coal among core customers in Japan, South Korea and Taiwan.

Cumulative Australian thermal coal imports for these countries were on track to reach 11.4m tonnes in January, according to Kpler ship-tracking data. This was 1.3m tonnes higher than December flows but 3% lower year on year.  

Easing supply concerns
A train derailment near Newcastle in December that supported the market at the time probably cut coal production by 1m tonnes, though a drawdown in port stocks prevented any impact on exports, Hassall added.

Kpler data showed Newcastle exports reached 14.4m tonnes in December, up 1.7m tonnes on November throughput and 2% higher year on year.

China’s reimposition of tariffs on imported coal from the start of the year likely reflected an attempt to rebalance the risk of a supply crunch with the risk to China’s domestic coal production posed by cheaper imports, Hassall said.

The tariffs do not affect Australia and Indonesia supply, owing to trade agreements, which should encourage lower calorific exports from these countries, he added.

Commodity data group SunSirs last assessed medium calorific spot Chinese thermal coal prices marginally lower on the week at CNY 930/t (USD 131/t).