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Asia coal prices down as winter season passes

Asia coal prices down as winter season passes
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January 31, 2023 (MLN): The coal prices and volumes are declining in Asia, on the back of easing Europe’s energy crisis and the passing of the winter season, as per Reuters.

“Prices of the main traded grades for coal used in power plants dropped to their lowest in months last week, and to the weakest in a year in the case of one of the major Australian varieties”, Reuters added.

Furthermore, Australian coal at Newcastle Port with an energy value of 5,500 kilocalories per kg, as assessed by commodity price reporting agency Argus, slipped to $129.87 tonnes in the week to January 27, 2023, the lowest since the week of January 21, 2022, it noted.

This grade of coal is most commonly purchased by Indian utilities and was the preferred Australian thermal grade among Chinese buyers prior to Beijing's unofficial ban on Australian cargoes, imposed amid a diplomatic dispute in mid-2020.

Despite the lifting of the Chinese ban, it is unlikely that buyers will flock back to Australian thermal coal, given the availability of inexpensive and similar quality coal from Russia.

Last week, the higher quality 6,000 kcal/kg Newcastle grade went down, with the index settling at $307.47 a tonne, which is below the 31% record high of $442.89 reached in early September.

“The price of Newcastle 6,000 kcal/kg physical cargoes compiled by global COAL was even weaker, ending last week at $294 a tonne, dropping below $300 for the first time since April last year” the Reuters added.

The price decline in coal prices is also observed in Indonesian grades, as Indonesia is the world’s largest exporter of thermal coal, while Australia ranks second and Russia third.

Indonesian lower-quality coal with 4,200 kcal per kg closed at $80.39 a tonne last week, it is the lowest since early September

The low sulphur and ash content of this grade makes it popular with Chinese utilities, and it is also preferred by Indian power plants due to its lower price than alternative grades from Australia and South Africa.

Russian thermal coal from Vostochny port, which is largely being bought by China after Japan curbed imports following Russia's invasion of Ukraine, has also been weakening.

In mid-January, the prices dropped to $157 a tonne which is the lowest since December last year.

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Posted on: 2023-01-31T13:55:51+05:00