The global Coal market experienced a downturn in Feb 2024 attributed to reduced demand and the absence of supply disruptions. Another factor influencing the decline in Coal prices was the occurrence of warmer-than-anticipated weather conditions, leading to decreased consumption. Inventories remained plentiful in several countries, with production temporarily halted in certain regions due to the Lunar New Year in China. This pause in production contributed to a decrease in demand during February 2024 as countries stockpiled supplies for the post-holiday period.
The South African Coal market witnessed a 1% decrease in prices during Feb 2024, moving from USD 99/MT to USD 98/MT. This decline was primarily influenced by diminished demand in Europe. The ongoing accumulation of Coal stockpiles in India and weaker demand in Europe played a significant role. The reduction in sponge iron and steel prices, coupled with elevated iron ore prices, further impacted European demand. Additionally, the anticipation of a higher contribution from the renewable energy unit, driven by improved wind conditions, also contributed to the overall price decrease. Despite challenges in rail infrastructure, such as a collision between two trains on the rail line to Richards Bay Coal Terminal (RBCT) causing damage to railway tracks, a new conveyor belt at the Richards Bay Dry Bulk terminal was commissioned, leading to increased Coal shipments.
In the Chinese market, prices saw a minor drop, notably experiencing a modest decrease of 0.8%. This decline was linked to the waning cold weather conditions and the stabilization of Coal transportation. Analysts observed a decrease in spot market demand, influenced by abundant imports and the fulfilment of long-standing contracts with domestic mining firms. Additionally, the uptick in temperatures and reduced demand from industries, which scaled down production during the Chinese New Year, further impacted the prevailing market dynamics.
The Australian Coal market observed a very slight decline in prices due to the impact of lower demand and market weakness affecting raw material prices. In response to these conditions, some plants chose to replenish their stocks with surplus and adopted a wait-and-see attitude. The Japanese market, a significant importer of Coal from the Australian market, experienced a decline in demand due to a temporary halt in steel production following an earthquake.
In the US market, prices decreased due to forecasts of warmer weather prompting a decline in Coal demand. The competitive nature of the market was reflected in lower prices, as the U.S. strategically adjusted pricing to remain competitive against other exporting countries. A decrease in domestic demand and an increase in exports were additional factors contributing to the overall decline in Coal prices. The country strategically adjusted its pricing to offer strong competition to other importing nations.
ChemAnalyst anticipates a potential incline in Coal prices in the forthcoming weeks, driven by the expected higher demand from Indian sponge iron and cement producers. The rise may also be attributed to the anticipated increase in supplies of South African material to Turkey and Asian countries, resulting from targeted sanctions against Russian exporters. Prices in the Indonesian market is expected to incline due to the anticipated shortage of supplies and tightened supply from Indonesia, along with renewed interest from some Northeast Asian countries because of anti-Russian sanctions imposed by US.
