Thermal Coal
Prices slide in March amid low China imports
April 2018
Demand will ease following strong imports over the northern hemisphere winter period. The price for thermal coal products from South Africa, Russia and Colombia are anticipated to follow a similar trend.

In March, the spot price for premium Newcastle 6,300GAR thermal coal averaged US$96/t, down 9% from February, with muted demand causing prices to steadily decline throughout the month. The spot price for Newcastle high-ash thermal coal followed a similar trend, falling 13% on month to US$77/t, driven by a sharp drop in China’s domestic prices for coal of the same grade. The spot price for Qinhuangdao 5500NAR thermal coal averaged US$88/t in March, down 14% on month, while spot prices for FOB Kalimantan 4200GAR and 3800GAR thermal coal averaged US$46/t and US$37/t, declines of 8% and 10% on month, respectively.

The Indonesian government has implemented a price cap on domestic coal sales, a move which will impact revenues for all coal producers throughout the country. The cap has been placed at US$70/t for thermal coal with a calorific value of 6,322kcal/kg GAR, around 30% below the current spot price on the international market. The price will be applied retroactively from the 1st of January 2018, and will be reviewed at the end of 2019.

China’s thermal coal imports totalled 17.4Mt in February, including 7.9Mt of lignite, an increase of 46% year on year but down 21% on month, in line with expected declines due to the country’s new year holidays. With sustained high coal prices, China has significantly increased imports of lower energy coals in order to aid cost control.