Coal news and updates

China's embargo on Australian coal imports and weather-related disruption to loadings from Newcastle cut Australian thermal coal exports to an eight-year low in March, although shipments look to have rebounded in April.

 

Australian thermal coal exports fell by 4.7mn t on the year to 13.5mn t in March, according to customs data — the lowest monthly total since 12.6mn t in March 2013.

 

This March marked the third straight month of no Australian thermal coal exports to China — the first time this has happened in 20 years — as trade tensions persist. Shipments were down from 4.2mn t in March 2020, meaning the suspension of trade with China accounted for the majority of the overall contraction in Australian thermal coal exports.

 

But supply-side disruption played a role too, as severe storms disrupted deliveries to the 211mn t/yr port of Newcastle and a broken shiploader temporarily halted loadings at the port.

 

Australian exports for Japan were also pared back significantly on the year in March, falling by 1.4mn t to 5.7mn t. Japanese coal-fired generation spiked on extremely cold weather at the start of the year, but overall power demand has since fallen back into line with 2020 on milder conditions and continuing economic restrictions to control the spread of Covid-19.

 

An uptick in Japanese coal-fired capacity constraints and recovering nuclear availability could also check Japanese power-sector coal demand this spring.

 

Australian exports to Vietnam and Malaysia also weakened on the year, but loadings for South Korea and India rose by a combined total of 1.1mn t to 2.5mn t and 1.1mn t, respectively. Sales to Taiwan were broadly flat.

 

Despite the absence of shipments to China, the five key markets for Australian thermal coal in Asia-Pacific still commanded 83pc of all thermal coal exports in March compared with around 80pc in February.

 

Early indications suggest that Australian thermal coal exports rebounded strongly in April, with shipments from the Port Waratah Coal Services (PWCS) terminals at Newcastle up by more than 1mn t from March.

 

Total Australian exports of all types of coal may have risen by around 18-24pc compared with March, according to Argus analysis based on the average rate of loadings in first three weeks of April, potentially underpinning annual growth of around 1.9mn-2.8mn t in the country's thermal coal exports last month.

 

This growth is likely to have been underpinned by strong sales to South Korea and India in particular, amid China's ban on imports from Australia. South Korean power demand is trending slightly ahead of 2020 as the country's economy recovers from the worst of the impact of Covid-19. And South Korean utilities may increasingly be looking to restock for the peak summer cooling period, which is when restrictions on the use of coal-fired plants are scheduled to be at their lowest and as nuclear availability dips because of planned outages.

 

In India, Australian NAR 5,500 kcal/kg established a 18¢/mn Btu cost advantage over the equivalent South African grade on a landed and taxed basis last month, after having been at close to parity throughout February and March (see chart). This may have helped Australian suppliers book more sales to India in April, although the surge in coronavirus cases in recent weeks has cooled the short-term outlook for Indian industrial coal demand.

 

The Argus Newcastle 6,000 kcal/kg price averaged $88.88/t in March, up from $86.32/t in February and $65.52/t in March 2020 and the highest monthly average since $93.03/t in March 2019. The Argus Newcastle 5,500 kcal/kg price averaged $55.73/t in March compared with $55.13/t in February and $54.22/t in March 2020.

 

Australia's average thermal coal export price was $71.07/t in March, up from $68.68/t in February and $65.97/t in March 2020, and the highest monthly average since $74.86/t in June 2019. March prices were based on the US-Australian exchange rate of $0.7711 used by the Australian Bureau of Statistics for the month.

 

Thermal coal export sales revenues were A$1.24bn ($959mn) in March, down from A$1.4bn in February and A$1.92bn in March 2020.

 

Source : https://www.argusmedia.com/en/news