The Newcastle premium thermal coal spot price averaged U$103/t in November, up 9.8% month on month, but decreasing approximately US$20/t to end the month at US$92/t. China’s two largest coal producers, Shenhua Group and China National Coal Group, signed long-term contracts with major domestic power generators at CNY535/t (US$78.60/t) on an FOB Qinghuangdao 5500 kcal/kg NAR basis, lower than the domestic spot price of CNY585/t (US$86/t) to limit thermal coal prices.
China imported 13.8Mt of thermal coal in October, up 45% year
on year, but down 17% month on month. Lignite imports decreased by
approximately 20% or 1.7Mt month on month to 6.9Mt, and combined bituminous and
sub-bituminous thermal imports were down by 13% or 1Mt month on month to 6.9Mt.
China National Development and Reform Commission (NDRC) allowed selected
Chinese mines to operate 330 days a year for the entire winter season to the
March Quarter of 2017, rather than the December Quarter of 2016. China produced
a total of 282Mt ROM coal in October, up 1.8% month on month. With China’s coal
output slowly increasing and long-term contract prices signed between China
major coal producers and power generators, AME expects that the thermal coal
spot price will gradually decline in December 2016.
By the end of October, state-owned Coal India Limited (CIL)
produced 274Mt of coal in FY2016/2017, the same level as last year and missing
its target by 33Mt. India imported 56Mt thermal coal during the same period,
down 6.53% year on year. In response to environmental concerns, the Indian
government doubled its Clean Environment Cess tax on coal from RS200/t
(~US$3/t) to RS400/t (~US$6/t) in February of this year. The impact of the tax
on low-cost thermal coal is proportionally greater than on high-cost coal and
has resulted in decreased imports from Indonesia in 2016. From January to July
2016, Indonesia exported 44.3Mt thermal coal to India, down 18.8% year on year.
Indian buyers are buying high energy coal from Australia, South Africa, and
Colombia, instead of Indonesia.
Due to higher coal prices, expansion, construction, and mine
acquisitions progressed in November.
- Glencore’s Mount Owen coal complex in NSW, Australia, has received approval to mine an additional 86Mt ROM coal, extending mine life 12 years to 2030.
- Prairie Mining has signed a strategic co-operation agreement with China Coal to advance financing and construction of Prairie's Jan Karski (formerly Lublin) project in Poland. China Coal will provide mine construction service and a debt financing package to fund development.