Australia’s thermal coal export shipments have recorded a marginal drop of 1% m-o-m to 18.3 million tonnes (mn t) in Aug’21 against 18.5 mn t recorded in Jul’21, CoalMint’s data revealed.
The country’s thermal coal exports to its key destinations, Taiwan and South Korea fell by 9% and 1% respectively. In case of India and Vietnam, Australian thermal coal exports saw a fall of 22% and 14% respectively.
The reason for the fall being rise in Australian thermal coal prices. Price data with CoalMint reveals that average prices of Australian 5500 NAR thermal coal have gone up by 17% m-o-m to $103/t, FoB basis. In fact, in the last week of Aug’21, it touched a mark of $110/t.
This price rise can be majorly attributed to supply constraints in Australia due to Covid restrictions and bad weather conditions. Also, the increase in Indonesian coal prices due to strong demand from China also pushed up various-origin coal prices including Australia.
Exports to Japan rise 17%
The only country that had recorded a rise in Australian coal imports is Japan. Australian thermal coal exports to Japan rose by 17% m-o-m in Aug’21.
Elevated liquified natural gas (LNG) prices and increased economic activity due to Tokyo Olympics made Japanese utilities to switch to Australian coal. The spot price assessment for LNG in Asia stood at an average of $16 per million British thermal units (mmBtu) which stood at $5.6 per mmBTu in late-Feb’21.
High-grade Australian thermal coal is favored by power utilities in Japan for its energy content and lower impurities.
Mismatch in bids-offers of Australian coal in Sept’21
In Sept’21, demand for Australian high-ash coal has turned strong from countries like Japan, South Korea and Taiwan but limited deals were heard to be concluded, according to sources.
Bid-offer spread for 5,500 kcal/kg NAR coal remained wide, with offers heard at $115/t FoB for Oct-loading cargoes while bids at $104-$105/t FoB.
While Covid restrictions have also impacted the production at mines, Australian producers were also heard to have been holding offers to see the outcome of tenders issued by utilities in Taiwan.
Amid domestic coal shortage in India, buyers are once again back to booking imported coal. Although many inquiries are being heard in the market, deals are yet to be concluded, informed market sources.
Outlook
Imports from Japan, South Korea, and Taiwan would rise in Sept’21 as the countries are back to restocking for the winter season amidst constrained supply of Indonesian coal due to heavy rains. In addition, LNG prices are expected to edge up further making Australian fossil fuel demand go up in Sept’21.
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