Thermal Coal
Lowest Prices Since May as China’s Demand Falls
November 2018
Analysing October, the average spot price for premium Newcastle 6300 thermal coal fell for the fourth month straight to reach US$108/t, down 5.3% month on month. Prices steadily declined throughout the month, with the weaker yuan incentivising Chinese end users to source product from the domestic market. China’s domestic coal production has also increased in September–October to take advantage of the rise in demand and favourable domestic pricing, causing additional end users to revert to domestic cargoes.

The spot price for high-ash Newcastle 5500 rose for the second consecutive month in October to average US$67/t, up 1.5% month on month. Prices steadily receded in the back half of the month, however, as a drop in South African prices enticed Indian end users back to their more prevalent supply sources. Power utilities and industrial end users are expected to remain vigilant in seeking the best deal in the 5500 market, switching between South African, Australian and domestic sources based on price. Combined with rising consumption accompanying the northern winter period, the price gap between premium and high-ash products is expected to narrow in the coming months.

Elsewhere, spot prices for FOB Kalimantan 4200 and 3800 thermal coal remained largely steady in October at US$38/t and US$31/t, respectively. Prices eased through the second half of the month as product became more available through southern China ports after the impacts of Typhoon Mangkhut. The spot price for Russian thermal coal into the Pacific market averaged US$116/t in October, down 1.7% month on month, leading to a further reduction in Russia’s price advantage into Asian markets due to stronger price declines for Australian products. In the Atlantic market, the spot price for Colombian 6000 thermal coal averaged US$93/t in October, up 2% from September.