The current calendar has been quite a volatile one amid the geo-political tensions, trade wars and supply disruptions that were seen throughout the year. This impacted the commodities market and prices, including that of thermal coal. Now, with the year coming to an end, let us analyse how energy prices and trade dynamics of key coal exporting countries changed during the year.
Indonesia
% share of countries in Indonesian exports
Indonesia, the world’s top thermal coal exporting destination, saw prices of its popular grade, the 4200 GAR, rise by $28/tonne (t) towards the end of the year (compared to January-March) to $90/t, FoB basis. Its prices touched an all-time high of $110/t in mid-March with the onset of the Russia Ukraine war.
Indonesia’s thermal coal exports came down by 8% towards the end of 2022 against the initial months’ average of 32 mnt.
While China continued to be the top importer of Indonesian coal, its percentage share in total imports came down from 28% at the start of the year to 25% towards the end, while that of India also came down from 25% to 21%.
China focused on reducing its import dependency and increasing domestic production. The Covid-restrictions there and cheaper availability of Russian coal also brought down China’s imported coal requirement.
On the other hand, the share of the Philippines, South Korea, and Malaysia went up marginally to 10%, 7%, and 8% respectively.
No major movement was seen to European countries as Indonesian sellers focused on fulfilling the needs of their traditional markets (Asian countries) and also their domestic obligations.
South Africa
% share of countries of South African exports
In case of South Africa, the coal trade dynamics have changed with sanctions on Russia by western countries. As a result, more of its coal is being diverted to Europe, especially the Netherlands, while exports to the traditional markets of India and Pakistan have dropped.
Prices of the popular grade 5500 NAR escalated post-war and continue to remain higher by 19% at present, against the prices in January. Throughout the year, rampant theft of cables and essential infrastructure took place, causing supply disruptions. Also, Transnet reported theft of hundreds of kilometers of copper cable, costing billions of rands.
Amid this, India started importing more of the 4800 NAR, as 5500 NAR turned quite costlier. Indian sponge iron players, (biggest user of South African coal) experimented with Russian, Australian, and Mozambique coal, impacting the former’s demand and exports to India. Buyers in Pakistan shifted to using more of their local and Afghanistan coal during the year. While reopening of coal-based power plants in Europe aided consumers felled by elevated gas prices, the countries there imported more of high-GCV South African coal.
Australia
% share of countries of Australian exports
Prices of Australia’s popular grade, the 5500 NAR, touched it’s all-time highs in March but plunged subsequently. At present, its prices are only up by 5% against the January 2022 levels.
Amid the sanctions on Russian coal, Japanese buyers bought more of good quality Australian coal by entering into long-term contracts with the suppliers there. Exports to India and Vietnam also increased marginally. Indian sponge iron players are using more of 4600 NAR Australian coal for blending with South Africa due to its cost competitiveness.
Elevated Australian coal prices weighed on their shipments to other Asian buyers such as South Korea and Thailand.
However, Australian coal shipments increased to Europe throughout the year. But towards the end, the same has come down with European countries being sufficiently stocked up in both coal and LNG and also because of the not-so-harsh winter this year.
United States
% share of countries in US. exports
In case of the US, sanctions on Russian coal gave the sellers there more coal to sell to Europe. While India continued to be the top export destination for the US, its share fell from 26% to 21% towards the end of the year and this was due to its elevated prices.
In India, the cement sector is the key buyer of high-GCV US coal and with pet coke prices being more competitive, the cement manufacturers avoided booking costlier US coal.
In case of Europe, the percentage share of the Netherlands in total exports went up by 8% to 20% towards the end of the year, while that of Japan went down marginally.
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