Coal News & Price Data
Coal News & Price Data
November 16, 2023 – More Accidents & Safety Shutdowns for Chinese Met Mines
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Coal News & Price Data – November 16, 2023
More Accidents & Safety Shutdowns for Chinese Met Mines
Coal Prices
Premium Low Vol (FOB Australia) $300.00/mt (unch)
CFR China PLV equivalent (Nov '23) $265.00 (+4.00)
PLV China Netback $285.90 (-0.35)
PCI (FOB Australia) ~$176.50 (unch)
Low Vol HCC (USEC) $247.00 (unch)
High-Vol A (USEC) $260.00 (unch)
High-Vol B (USEC) $227.00 (unch)
CFR South China (5,500) $114.00/mt, (unch)
Kalimantan (4,200) $56.65 (+0.15)
FOB Newcastle (6,000) (Nov '23) $123.25 (+0.75)
FOB Newcastle 20% Ash (5,500) $96.40 (unch)
CFR India West (5,500) $111.50 (+0.40)
CIF ARA (6,000) $122.00 (+1.00)
Richards Bay (5,500) $93.50 (-0.35)
Baltimore 3% Sulfur (6,900) $88.00 (unch)
More Accidents & Safety Shutdowns for Chinese Met Mines
Bullish: Three fatal accidents in as many days have led to mining suspensions in Shanxi, a major coal-producing province in China. A fire at Yong Ju coal mine resulted in at least 26 confirmed deaths, leading to safety checks and the suspension of all coal mines in Lishi, affecting nearly 17 million metric tons per year (mt/y) of raw capacity. Operations of Dongtai Group, including a 5 mt/y mine in Linfen, have been halted. Another death occurred at an underground mine operated by Shanxi Coal Import & Export Group, and a roof collapse at Shanxi Huaning Coking Coal claimed another life. This round of mine suspension is expected to impact met coal supply and prices, prompting a rise of up to RMB200/t. The Dalian Commodity Exchange's January coking coal contract closed 3.2% higher. Shanxi province holds 56% of China's met coal reserves, making it the largest met coal-producing region. The accidents may drive Chinese steelmakers to consider Australian seaborne prime hard met coal, potentially creating an import arbitrage opportunity as domestic prices rise.
President Xi Jinping has called for additional safety measures to prevent such accidents. The cause of the fire is under investigation, and police have detained several individuals for questioning. This incident adds to a series of recent accidents in China's coal industry, prompting increased scrutiny and safety inspections.
On November 5, 2023, the Xinhu Coal Mine of Anhui Bozhou Coal Co., Ltd., a branch of Huaibei Mining, experienced water leakage, reaching 300m3/h with sediment. As a safety measure, the mine temporarily suspended production. The company initiated emergency plans, ensuring the safe evacuation of underground personnel with no reported casualties. Huaibei Mining is addressing the issue, formulating a governance plan in collaboration with China Coal Science and Technology Xi'an Research Institute. The mine's main products are coking coal and 1/3 coking coal, with an approved capacity of 3 million tons per year. The incident temporarily impacted production, and the company is working on a water control and system recovery plan to resume operations. The affected assets are insured, and the company is in the process of reporting to the insurance company for loss verification and claim settlement.
Thermal Coal News
Neutral to Bullish: Demand for low-calorific value (CV) cargoes in the Asian thermal coal market increased on November 15, with notable interest from China, India, and Vietnam. Chinese buyers sought prompt loading of low CV coal to cover short positions for end-November deliveries, while Indian buyers capitalized on falling prices. However, a trader noted that China may not resume aggressive buying due to sufficient stockpiles and increased domestic production efforts. Indian inquiries surged, especially from the power sector, despite existing coal stockpiles. Vietnam and Taiwan also showed moderate demand. Indonesian miners maintained steady offers in anticipation of increased Chinese demand, and additional production quotas are expected to bring more cargoes to the market in December.
Russia is projected to export 220 million metric tons (mt) of coal in 2023, compared to a total production of 440 million mt. Despite European sanctions on Russian coal in response to the Ukraine invasion, exports have remained robust. With declining demand from Europe, Russian coal exporters have shifted focus to the Asia-Pacific market, facing logistical challenges due to limited rail and port capacity towards Eastern ports. The breakdown of thermal and metallurgical coal in the export figure is unspecified, but more thermal coal is produced. Russian coal exports are expected to grow, but a lack of export infrastructure poses a significant hurdle. Demand for Russian coal exceeds export capabilities, even with existing ports in the southern basin and Northwest facing constraints.
Bullish: In November 2023, Indonesia's Energy and Mineral Resources Ministry released the Indonesian Thermal Coal Reference Price (HBA), showing an overall increase in coal prices compared to the previous month. The reference prices for various coal grades have risen, notably high-calorie coal. The specific reference prices for different coal grades include:
HBA: High-calorie coal at 6322 kcal has a reference price of $139.8/ton, up $15.84/ton from the previous month.
HBA I: Coal at 5300 kcal has a reference price of $103.2/ton, increased by $21.82/ton from the previous month.
HBA II: Coal at 4100 kcal has a reference price of $52.86/ton, up by $2.45/ton from the previous month.
HBA III: Coal at 3400 kcal has a reference price of $28.49/ton, increased by $2.99/ton from the previous month. The adjustment in reference prices provides flexibility for miners to adapt to rising production costs caused by increased mining rights taxes. The pricing formula is based on prices from the fourth week two months ago to the first week of the previous month (30%) and the second and third weeks of the previous month (70%).
Benjamin Hill Mining, a Canadian exploration company, has signed a non-binding letter of intent to acquire a 20% ownership stake in Aion Mining, along with its interest in a fully permitted coal project in Santander, Colombia. The deal involves a total consideration of $1.12 million, with Benjamin Hill paying $600,000 in cash and issuing $525,000 worth of its shares. The company plans to work with Aion Mining's team to develop the coal asset and generate revenue.
Metallurgical Coal News
Neutral to Bullish: Asia met coal FOB prices remained stable on November 15 amid limited trading activity. The benchmark Premium Low-Vol Hard Coking Coal was priced at $300/mt FOB Australia, with delivered CFR China prices rangebound at $300/mt. In the FOB Australia market, bids for globalCOAL HCCA Branded coal were initially at $290/mt and later increased to $295/mt and $300/mt without attracting offers. Availability of Premium Mid-Vol Coal for H2 December loading from a major Australian miner is expected to attract bids. Market participants anticipate increased trading activities when more India-based participants return from holiday. Prices in the CFR China market are rangebound, with wide pricing gaps hindering deals. Chinese mills show interest in Australian prime coal, but the price gap remains. Stringent safety checks in China may reduce domestic supply, supporting both domestic and seaborne coal prices. In the Chinese met coke market, prices are gradually climbing, supported by a slight improvement in steel prices and higher pig iron production figures. In the international met coke market, a major Indian steel mill held a seaborne coke tender, and market participants await the conclusion of the deal for clarity on market direction. Indicative offers for duty-free origins CSR 65 met coke were heard at around $380-$385/mt CFR India.
Bullish: Australian seaborne metallurgical coal prices increased, with a deal at $312.00/t FOB for 40,000 t of Australian PMV material. The cargo, a new prime hard product with indicative specs of 69% CSR, 23% ad VM, 10.5% ad Ash, was sold by a trader/producer into the Indian market. This deal reflects a market rebound from last Friday's low point. December paper also traded higher at $306.00-325.00/t for 12,000 t during Asian trading hours. The prices are influenced by market sentiment in China, where fatal accidents at mine sites have affected domestic coking prices and potentially impacted Australian prime hard prices positively.
The United Steelworkers (USW) has withheld support for Glencore's proposed acquisition of Teck Resources' metallurgical coal unit Elk Valley Resources, citing a lack of direct communication from Glencore. The USW represents over 4,000 Teck employees in British Columbia. While acknowledging some of Glencore's broad commitments, the union seeks specific assurances and details about plans for Elk Valley's operations and its workers. The USW will closely monitor and participate in Canada's review of the takeover, focusing on employment, environmental implications, and Indigenous rights. Glencore announced its agreement to purchase a 77% stake in Elk Valley for $6.93 billion on November 14.
Glencore's $9 billion deal to buy Teck’s steelmaking coal business marks the third major transaction in the metallurgical coal space in the past 50 days. This indicates the continued importance of coal for primary steelmaking, despite rising interest in "green steel" initiatives. The acquisition elevates Glencore to the top tier of seaborne suppliers of met coal, making it the second-largest producer globally. The deal follows recent transactions by Whitehaven Coal and Sev.en Global Investments, highlighting ongoing M&A activity in the metallurgical coal sector. Despite concerns about ESG, investor interest in coal companies remains high due to strong cash generation and expected returns.
Steel & Iron Ore News
Bearish: Malaysia has implemented a two-year moratorium on steel investment, effective from August 15, 2023. The moratorium covers various aspects, including inquiries, assessments, new applications, license transfers, expansions, and diversifications for manufacturing licenses in the iron and steel industry. The Ministry of Investment, Trade, and Industry aims to review and address challenges faced by the local iron and steel industry, aligning with the New Industrial Master Plan 2030. Manufacturing license applications supporting the national industrial master plan may be considered for exemption, particularly those involving high-value and low-carbon technologies. The government will assess new applications based on 12 parameters defined under NIMP 2030 to address overcapacity issues in Malaysia's steel industry.
Bullish: Portside prices of imported iron ore in China increased in the week ending November 15 due to strong market sentiment. Pilbara Blend (PB) fines traded at RMB 1000/wmt (seaborne equivalent $130.71/dmt) at Shandong ports on November 15, up RMB 35/wmt from the previous week. The overall market sentiment was boosted by a more promising outlook for the Chinese economy, with several stimulus policies released recently. However, iron ore liquidity in the portside market remained limited as most steel mills were cautious in procuring at current high prices. The negative implied profit margins for selling dollar-based seaborne cargoes in yuan-based portside markets continued to impact the booking of seaborne cargoes.
British Steel is planning a £1.25 billion ($1.53 billion) project to replace its blast furnace operations with two electric arc furnaces (EAFs) at its headquarters in Scunthorpe and its manufacturing site in Teesside. The new furnaces, subject to UK government support, aim to reduce carbon emissions. If approved, the EAFs could start operating as early as 2025. The proposal has raised concerns among unions about potential job losses, with estimates suggesting up to 2,000 jobs may be affected, particularly at the Scunthorpe site. The unions emphasize the need for discussions and expressed concerns about the import of virgin steel under an EAF-only approach.
Power Industry News
Bullish: India's LNG imports are expected to reach 40 million metric tons (mt) per year by 2030, a substantial increase from current levels, driven by declining domestic gas production, rising energy needs, and stabilized prices. The country's regasification capacity is projected to rise from 45 million mt/year to around 60 million mt/year in the coming years. The Russia-Ukraine war shifted LNG dynamics, impacting Europe more significantly, but the outlook for 2023 has improved. Softening Asian spot LNG prices enable countries like India, Bangladesh, and Thailand to participate in spot procurement. Asia is anticipated to experience increased LNG buying activity from 2025-26 with new global supply tranches. India favors long-term LNG contracts to mitigate price volatility and supply risks. GAIL, with 5.8 million mt/year in long-term contracts with the US, sees diversification benefits in terms of geography and pricing away from Brent.
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