Author: Vlastimil Vilímek | Prague on 24.10.2023

Price trends in 2022:

In 2022, prices for high-grade thermal coal FOB Newcastle, Australia, reached record highs, while prices for lower-grade Indonesian coal remained stable.

The price spikes were caused by a disruption in the balance of coal markets, driven by rising global demand and limited supply.

FOB high-carbon coal prices in Newcastle were kept high because it could not be easily replaced by other types of coal.

Unusual meteorological conditions associated with the La Niña phenomenon, such as heavy rains and flooding, had a significant impact on coal production, specifically in Australia.

Coal traded in the Pacific Basin is characterised by a wide variance in calorific value, reflecting different market segments.

The reduction in the availability of Indonesian coal on the world market caused by the temporary export ban by the Indonesian government in January 2022 has also impacted coal prices.

Regulatory action by the European Union targeting Russian coal has led to a situation where some supply could not be shifted to alternative markets due to logistical constraints on eastbound transport routes.

The conflict between Russia and Ukraine is causing energy prices to soar, leading many countries to switch to coal-fired generation, which is now a cheaper alternative to gas prices.

The market for high-quality thermal coal was so tight in 2022 that prices for this coal outpaced metallurgical coal prices in the second half of the year, which is unusual.

Thermal coal prices crossed the $400/t mark several times in 2022, which was particularly noticeable when compared to other commodity prices.

In September and December 2022, high-grade thermal coal prices were even higher than Brent crude oil prices.

During 2022, high quality coal prices in the South China Sea diverged from trends in Newcastle and the ARA (Amsterdam-Rotterdam-Antverp), remaining stable at an average level of around USD 169/t.

However, towards the end of 2022, prices in the ARA started to decline due to mild weather and ample supply from European coal-fired power plants.

With the onset of 2023, we have seen an adjustment in market prices.

As the new year approaches, we have seen a levelling out of coal prices between the ports of Amsterdam, Rotterdam and Antwerp (known as “ARA”) and southern China, thanks to a resumption of metallurgical coal imports from Australia by Chinese customers.

Prices in both locations were around USD 146 per tonne.

The end of 2023 then brought us an interesting development.

High carbon thermal coal prices in Newcastle and ARA reached around USD 119 per tonne. The last time we saw such prices was in early 2022.

Prices in the South China Sea were then just below USD 100 per tonne, a situation last seen in mid-2021.

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