Australian thermal coal prices have risen 23% m-o-m in Jul’21, . Prices for 5,500 NAR are currently being assessed at $90/tonne (t) FoB Newcastle. In Jun’21, the same was recorded at $73/t while in Jan’20, these averaged $76/t, FoB.
What drove up Australian coal prices?
When China announced the unofficial ban on Australian coal imports in the latter half of 2020, it was a big blow to Australian thermal coal prices as the same touched a the low of $37/t in Aug’20.
Countries like India, Pakistan, and Vietnam took advantage of this price drop and were seen booking Australian thermal coal in significant quantities. However, this was not enough to compensate for the absence of the huge Chinese appetite and failed to give the required push to Australian coal prices.
Till May’21, Australian thermal coal prices were hovering at $58/t, FoB, lower (by $20/t) against its peers Indonesian and South African coal prices.
However, in Jun’21, a more-than-usual hot summer in north east Asian countries, outages at nuclear power plants in Japan and South Korea, high oil-linked LNG prices led to increased demand for thermal coal, which pushed up Australian thermal coal prices by $15/t to $73/t in a month.
Now, in Jul’21 (especially third week), Australian thermal coal demand increased further, pushing up prices by $17/t m-o-m. However, supply worries from other sources persisted due to:
- Supply disruptions in South Africa due to civil unrest.
- Indonesian coal supply impacted due to rising Covid cases in the country.
- China’s domestic coal supplies hampered due to heavy rains.
On the demand side, South Korea, Taiwan and Japan’s power requirement remained quite high in Jul’21 due to scorching summer heat.
Indian buyers take a backseat
Amid escalated prices, Indian buyers of Australian coal have moved to the sidelines and are opting for domestic coal.
CoalMint data shows, 0.29 million tonnes (mn t) of Australian thermal coal is set to arrive at Indian ports between 22 Jul to 11 Aug’21 which is less than the average of 1 mn t arriving every 20 days till May’21. The highest quantity is being brought in by Adani Enterprise and Coastal Gujarat Power.
Outlook
In the current scenario of supply constraints from Indonesia and South Africa and increased demand from north east Asian countries, Australian thermal coal demand and prices are likely to remain high in the coming days.
Leave a Reply