iEnergy Natural Resources Limited’s Post

Transcript

Hello everyone, I am Riya Vyas Senior Analyst-Coal and Coke at iEnergy Natural Resources Limited, and today in this video I'll briefly discuss what has happened in the coal market during August 2024. International thermal coal prices in August initially reversed their bearish trend and saw a significant upward correction. However, prices soon shifted back into bearish territory as major importers, particularly India and China, scaled back their procurement activities. Even supply disruptions in Indonesia failed to support coal prices during the month. The market's brief bullishness was driven more by sentiment than by strong fundamental demand. Prices for South African, Russian and Australian coal increased, while USA coal prices remain stable. In contrast, Indonesian low CV coal prices stayed under pressure. Even the further sanctions on Russia the hoped for price rally failed to materialize. European coal spot prices saw a significant fluctuations throughout the month. Initially, prices surged to a three-month high of $122. Mid-month prices briefly retreated to $180. By the end of the month, sport prices have settled around $ 120. Overall, while the market remains tense, the price increases are largely driven by external geopolitical factors rather than fundamental demand. South African average coal prices in August experienced a notable rise of 6 to 9% month on month due to a mix of geopolitical tensions, supply disruptions, and shifting market dynamics. Geopolitical instability in the Middle East and Russia-Ukraine and supply concerns in the natural gas market drove up prices with South African 6000 NAR spot coal reaching up to $130. However, as the European coal market stabilized and demand from India remained weak, prices saw a decline towards the end of the month, falling to $110. China's coal demand has been weak, influenced by various factors across regions. Heavy rainfall in southern China, driven by Typhoon Gami, increased hydropower generation, reducing the need for coal-fired power. Despite heatwaves in other regions, boosting local coal demand, high coal stockpiles at power plants and ports have given buyers significant leverage. Industrial activity, particularly in the real estate, remains subdued, further dampening coal demand. The influx of material from long term contracts and minimum spot market activity have also contributed to the overall decrease in coal procurement. With adequate stock levels, strong hydro and renewable energy output, there has been little urgency in coal purchases this month. Indian coal demand has been significantly impacted by the monsoon season, leading to reduce electricity consumption and industrial activity. The market has experienced low procurement activity, with buyers adopting a wait and see approach amid high stock levels and subdued industrial demand. The market is expected to rebound once the monsoon season ends. Indonesian coal prices have shown varied trends in August. High CV coal prices rose by 1%, while low CV coal prices decreased by 3% month on month. Supply disruptions, including the bridge collapse and adverse weather, had minimal impact on overall prices, which remain under pressure from reduced demand and high stock levels in China and India. Australian FoB 6000 NAR coal prices fluctuated initially rising to a two-month high of $140. However, despite brief support from Southeast Asia amid heat waves, the overall bearish market led to a gradual decline in prices. By the end of the month, the 6000 NAR grade had dropped back to $130 and the 5500 NAR grade followed a similar trend, falling from $90 to $85. Operational disruptions at the Newcastle port and anticipated demand from China due to heat waves did little to offset the downward pressure on prices. Russian 6000 NAR coal initially supported by limited supply due to logistical challenges, international sanctions and high production cost reached a peak of $117, a nine month high. However, as global coal prices softened, Russia coal prices begin to contract, ending the month at $110. The average Russian coal prices increased by 3% month on month. The August month ended with Russia facing new sanctions from the USA targeting around 400 entities, including major coal and steel companies. At the same time, the Russian government has extended the suspension of coal export duties until December 2024 to support the struggling coal sector, which has faced significant financial challenges. Now coming to the coking coal market. The coking coal market faced a pronounced downward trend, driven largely by the ongoing weakness in steel prices. Despite an Australian mine accident, the market remained oversupplied, with demand falling to keep pace. Chinese buyers showed some interest, but it was insufficient to counter the overall glut, while Indian buyers largely stayed inactive. The sharp decline in steel prices significantly reduced the demand for coking coal, forcing sellers to lower prices to stay competitive. Without strong steel demand, the need for coking coal dwindled, leading to a drop in prices. By the end of the month, Australian PLV coking coal prices had slipped below the $200 mark, reaching a two-year low. With the Indian monsoon season coming to an end and coking coal prices have corrected, there could be an uptick in demand from the industrial sector as margins improve. However, for this demand to materialize, prices will need to remain competitive. The petcoke market experienced a sustained bearish trend. Demand from India was notably sluggish due to the ongoing monsoon season, which dampened construction activity and kept the cement sector's procurement weak. Ample stock availability empowered buyers with strong bargaining power, further pushing prices downward. Despite the falling prices, Petcoke continued to be preferred over thermal coal by cement manufacturers due to its cost-competitiveness. Indian CFR Petcoke prices from various origins have contracted by 1% month on month in August. So this was all about the current coal market update. Thank you so much for listening to this video. Follow us on LinkedIn for more updates on coal and coke market or share your e-mail ID to get various reports in your mailbox. Thank you so much.