“Coal prices continue to face upward pressure as demand remains strong from India and China,” ANZ Bank said in a note.
In China, the Zhengzhou exchange’s most liquid thermal coal contract for September last settled at CNY 863.40/t (USD 128/t), up 4% on the week , with buyers looking for coal ahead of the summer cooling season.
“China has removed import duties on coal, increasing competition for coal shipments, although rising hydro reservoir levels may lead to some decline in demand for coal,” ANZ Bank said. , regarding the country’s waiving of taxes on coal imports for 10 months, starting May 1.
In India, the world’s second largest importer of thermal coal, demand for maritime coal remained strong despite high international prices.
Indian power plant stocks last rose 5% on the week to 21.8 million tonnes, although they are still down 20% on the year, according to data from the Central Electricity Authority (ECA).
A Pretoria-based coal analyst said Indian buyers – which accounted for around 40% of South Africa’s thermal coal exports in 2021 but have been largely out of the market in recent months – are slowly coming back.
But he noted that Europe would remain a focus for South African exporters in the coming months as price-sensitive importers from India and neighboring Pakistan would not pay such high prices.
“India is turning to imported coal to ease the domestic supply crunch,” ANZ Bank said, noting that this came at a time when demand – and therefore competition – from Europe for non-Russian coal continues to increase.
The EU will completely ban imports of Russian coal from August 10, so buyers in the region are looking around the world for alternative materials.