Elevated prices, mild weather in Asia drags down Australian thermal coal exports in Feb’22

Australian thermal coal export shipments registered a 22% m-o-m decline to 14.02 mnt in Feb’22 as escalated prices and mild winter conditions in Asia resulted in limited demand from major coal-consuming countries, CoalMint’s vessel line-up data reveals.

Prices of 5500 NAR rose to $157/t, FOB, up 10% m-o-m in Feb’22, while those of 6,000 NAR increased over 30% m-o-m to an average of $215/t, FOB basis. Notably, Australian thermal coal prices were already higher by a whopping 200% on a y-o-y basis.

Adverse weather conditions also contributed to the decline in shipments last month as miners struggled with the aftereffects of the severe storms seen in Dec’21 that affected deliveries from the Newcastle Port and flooding in coal mining regions in New South Wales and Queensland.

Exports to Asian countries drop

Australian thermal coal exports to Japan fell sharply by 16% m-o-m to 7.1 mnt in Feb’22, while those to South Korea fell by 34% m-o-m to 2.4 mnt.

Several Asian buyers had procured Australian coal at higher prices in Jan’22 amidst expectation of limited supply from Indonesia. This resulted in lower inquires in Feb’22.

Shipments to Taiwan and Vietnam also fell 40% and 19% m-o-m to 1.3 mnt and 0.5 mnt, respectively.

Shipments to India rise

Australian thermal coal exports to India, however, rose by a modest 7% m-o-m on 1.08 mnt in Feb’22 as limited domestic coal availability compelled the non-power sector to rely on imported material.

A dearth in South African stock also prompted non-power coal consumers to look for alternatives in Australia.

Shipments to Netherlands decline

Interestingly, Australian coal shipments to the Netherlands registered a 70% m-o-m fall to 0.07 mnt in Feb’22 as storms impacted operations at northwest Europe’s largest coal import hubs – the Netherlands and Belgium.

However, demand in most parts of Europe remains high as gas supply is restricted from Russia in the wake of its ongoing tension with Ukraine. Germany has asked to extend the life of several coal or nuclear plants to cut reliance on Russian gas.

Short-term outlook

With all-time high Australian coal prices currently, a major rise in export shipments is less likely in the upcoming months. However, persisting supply constraints from major exporters like Indonesia and South Africa, may, however, support Australian coal demand.