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Pulse of Coal - August 21

Coal industry - actual figures and facts. Partner project of the Modern Analytical Agency (CAA) and the EastRussia portal

Mining, logistics, prices, export - all that the coal industry in Russia and in the world lives on is concise and to the point - in a new partner project of the Modern Analytical Agency (CAA) and the EastRussia portal

Pulse of Coal - August 21
Special project Coal of the East of Russia

A brief overview of the global coal market

Last week, steam coal prices in Europe remained above $ 150 / t. The news of August 16, 2021 about the launch of the Nord Stream 2 gas project in the EU put pressure on gas prices on the TTF trading floor to EUR 41.15 / MWh (-4.75 EUR / MWh by August 11, 2021), which negatively affected coal indexes. Coal reserves at ARA terminals reached 4.36 million tons (+0.29 million tons + 4% by August 11, 2021).

South African material indices were held near the $ 140 / t mark. against the backdrop of problems with the railway line connecting the coal-mining provinces of South Africa and the port of Richards Bay. An additional factor behind the rise in prices is the increased trading activity of Indian consumers.

Domestic coal prices of 5500 kcal / kg NAR in Qinhuangdao port fell below $ 155 / t. The wait-and-see attitude of Chinese buyers due to the high price of material in the domestic market continues to negatively affect the coal indices of the PRC.

China's Development and Reform Commission (NDRC) has called on a number of provinces to develop measures to limit electricity consumption in the winter of 2021.The Commission's decision is due to the high volume of coal burning by local CHP plants and the limited supply of energy material in the country's domestic market amid logistical problems and the closure of some coal mines after a series of safety checks.

On August 12.08.2021, 53, the Chinese government announced the resumption of coal mining at 44 mines in selected provinces due to increased demand for electricity due to extreme heat and industrial recovery. It is assumed that the mines will operate within a year and will additionally supply XNUMX million tons of coal to Chinese power plants.

Australian thermal coal quotes corrected to $ 175 / t due to limited supplies of imported material from Australian producers on August 05.08.2021, 19, a weekly ban on coal mining was introduced in key Australian coal mining regions due to a new outbreak of COVID-20.08.2021, which was extended until XNUMX/XNUMX/XNUMX

The quotes of the Indonesian material remained unchanged at $ 125 / t. against the backdrop of government restrictions on coal exports and a decrease in demand from consumers from the Asia-Pacific countries.

The Australian government extended a weekly ban on coal mining due to the outbreak of COVID-19 until 20.08.2021, which positively affected Australian coking coal indices above $ 225 / t.

The weekly ban on mining at a number of coal mines in Australia due to the outbreak of COVID-19 has positively affected the Australian coking material indices, which exceeded $ 220 / t.

Nord Stream 2 slows down price rally in coal and gas markets

In the summer of 2021, European gas indices on the TTF trading floor rose to 13-year highs as a result of a number of factors, including low reserves in gas storage facilities, disruptions in gas supplies to Europe and growing gas demand in the Asia-Pacific region.

Gas quotes TTF in July 2021 soared to $ 12.5 / mln BTU, which in
7 times higher than the indicators of the same period last year. Rising gas indices boosted demand for coal to pre-pandemic levels, pushing daily coal indices to over $ 150 / t. The average value of coal quotations in July 2021 almost tripled to
USD 130 / t compared to USD 50 / t in July 2020. The key factors in the gas market, which largely contributed to the positive dynamics of coal prices, are a shortage of gas supplies to the EU, a rapid recovery in electricity demand and a decrease in RES production in Europe and Asia-Pacific countries.

In 2021, a sharp cold snap in winter and high average daily temperatures in summer led to the depletion of European gas storage facilities. In August, EU gas reserves fell to 8-year lows below 60%, while some gas storage facilities were below 15%.

A series of unforeseen accidents at the facilities of the key Russian manufacturer Gazprom, speculation about the launch of the Nord Stream 2 gas pipeline and an increase in US LNG supplies to Asia compared to Europe have only exacerbated the market situation. Given the shortage and high cost of natural gas, key generating companies have increased their coal combustion in order to prevent possible power outages.

Economic activity, which has recovered to near pre-COVID-19 levels in both Europe and Asia, has contributed to increased demand for electricity. Scarce gas gave way to more affordable and cheaper coal, despite rising prices for CO2 emissions quotas in the EU over $ 55 / t. and the commitments of many countries to phase out coal in the energy sector.

The decline in wind generation in several European countries, combined with droughts and limited hydroelectricity in China, have provided additional support to coal prices.

Nevertheless, Gazprom recently confirmed its plans to launch the Nord Stream 2 gas project in October 2021. According to experts, the new pipeline can level the current gas shortage in the EU and balance the European gas market ahead of the heating season. TTF gas quotes have already begun to respond to a potential increase in supply, negatively impacting coal prices.

Last week, coal quotations in the EU fell to $ 150 / t. against the background of market participants' expectations regarding the start of supplies via Nord Stream-2. Growth in gas exports to the EU may reduce the demand for coal amid expensive CO2 emission quotas and environmental restrictions on coal combustion in a number of European countries.

The dynamics of gas and coal prices is shown in the graph below.

The resumption of the work of Chinese coal mines may limit the export of Russian coal to the PRC

In January-June 2021, Russian coal exporters increased supplies to China to 25 million tons (+9 million tons compared to January-June 2020).

Export growth is due to the current shortage of coal in the Chinese market. Recent material handling problems caused by severe flooding and reduced coal production by Chinese coal companies amid COVID-19 restrictions and mine safety checks have boosted demand for imported coal in the country. Moreover, last year, China imposed a ban on imports of Australian coal due to political tensions between the countries. In January-June 2021, China imported 139.6 million tons (-34.5 million tons compared to January-June 2020).

On August 18, 2021, by the decision of the State Committee for Development and Reform of the People's Republic of China, mining at many Chinese coal mines was resumed after limited work last month amid safety checks.

This decision is necessary to increase the volume of supplies of domestic coal, which is associated with the recovery of the Chinese economy after the COVID-19 pandemic, contributing to an increase in demand for electricity. Coal mines with an aggregate production volume of 60 million tons are located in Shanxi and Xinjiang provinces.

According to experts, an increase in coal production in the domestic market of China may limit the demand for material of Russian origin in the medium term.

Tigers Realm Coal to begin development of the Zvonkoye field in Chukotka

On August 18, 2021, the Russian state agency for the examination of project documentation and engineering survey results (Glavgosexpertiza) issued a permit for the development of the Zvonkoye coal deposit by Beringpromugol, owned by the Australian mining company Tigers Realm Coal. The Zvonkoye coal deposit is located in Chukotka (Russia) not far from the Fandyushkinsky coal deposit, which is already being developed by Beringpromugol. The design capacity of the new open-pit coal mine at Zvonkoye is expected to reach 650 tonnes of coking coal by 2023.

Photo: Tigers Real Coal

In 2014, Tigers Realm Coal acquired 80% of the Bering port. In 2016, Beringpromugol started developing the Fandyushkinskoye coal deposit. In February 2020, the company announced its plans to begin construction of a mining and processing plant in 2021. In accordance with the strategy of Tigers Realm Coal, the plant represents the second stage of the project development, which provides for an increase in production volumes to 2 million tons of coal per year, as well as modernization Bering port. In 2020, Beringpromugol produced 0.76 million tons of Zh grade coal. By 2028, the company intends to increase production volumes to 10-12 million tons of high-quality coal concentrate per year.

Tigers Realm Coal is an international coal company headquartered in Australia. The company owns coking coal mining assets in Russia, Australia and Canada.


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