Thermal coal exports from Australia are set to increase as operations at the Newcastle Coal Infrastructure Group (NCIG) terminal on Kooragang Island have returned to normalcy after a ship loader damaged in a storm last November was returned to service.
The terminal had been running on a single shiploader since November, limiting the amount of coal it could move through its three berths. The disruption has resulted in reduced exports from the terminal as it moved 15 million tonnes (mn t) of coal between Jan-Jun’21, one third of Newcastle’s other operator, Port Waratah Coal Services, that exported 46.5 mn t during the same period.
With return of the second ship loader, the NCIG terminal will be capable of operating at its licensed capacity of 66 mn t/year.
Australian thermal coal demand strong
The reduced capacity of the NCIG terminal has limited the amount of coal that its customers can ship at times when prices are at record levels. But market experts believe that the reduced supply from the terminal is also one of the key factors that have driven up the Australian thermal coal prices in recent times when ex-China demand from South Korea, Japan, and Taiwan is quite robust during the ongoing summer season.
The 5,500 NAR Australian thermal coal price has risen in July to $90/tonne (t) as against an average price of $58/t in May’21 and $53/t in Jan’21.
In case of India, cement buyers that bought Australian thermal coal have retreated from making bookings amid escalated prices. CoalMint’s vessel line-up data shows arrival of 0.68 mn t of Australian thermal coal between 5-22 Aug with 95% purchase being made by Adani Enterprise.
Outlook
Demand for thermal coal from north east Asian countries, especially South Korea, is expected to subside in the coming days amid increased availability of nuclear power. This, coupled with increased supplies from the NCIG terminal, will bring some balance in demand-supply dynamics. However, as another key coal supplier, Indonesia is busy diverting the major portion of its coal to China, Australian sellers would continue to fill in the gap created, thus, keeping its prices escalated in the near term.
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