During the month of May 2024, Coal prices in the APAC region experienced an incline. This rise was driven by a combination of increased consumption, as well as low production levels. Further, the prices were affected by a decrease in output from exporting countries, contributing to the overall price escalation. The demand for Coal outpaced the available supply, creating a situation where supply could not keep up with the rising demand. This imbalance between supply and demand further contributed to the increase in Coal prices throughout the region.

In May 2024, Coal prices in China experienced a notable increase of 5.3%, rising from USD 114/MT to USD 120/MT. This increase reflected an overall positive trend in the coking Coal market throughout the month. By the end of May, Coal production in the mining regions had remained relatively stable, and downstream coking enterprises were actively replenishing their inventories as needed. The market atmosphere was generally optimistic, with mining areas efficiently shipping goods. Although bidding situations varied, certain Coal types saw improved transaction volumes. Recently, Coal prices have shown narrow fluctuations, maintaining a relatively stable overall trend. The coke market went through one round of price increases and one round of price decreases during May. At the beginning of the month, the coke market continued the upward trend from April, and during the May Day holiday, the fourth round of price increases took effect. As a result of these successive price hikes by coke companies, their profits recovered, leading to a steady rebound in their operating rates and a significant relaxation in coke supply. However, downstream demand showed some weakness as the prices of finished products declined and steel mills faced poor profit margins, causing the fifth round of price hikes to be postponed.

In the shipping sector, carriers have been pushing for increases in spot rates, General Rate Increases (GRIs), and surcharges on all outbound lanes from Asia. This push has been driven by heightened demand and increasing equipment challenges at several origins. Consequently, more rate increases can be expected. The tightening availability of vessel space from Asia has propelled the Shanghai Containerized Freight Index (SCFI) to its highest level, with a 19% rise following the last week’s holiday. There have been sharp increases in freight rates on all long-haul routes ahead of the summer peak season.

Meanwhile, Australian Coal prices have also surged due to stronger demand from several Asian countries, including Thailand, the Philippines, and Vietnam, which are experiencing record heatwaves that are driving up energy consumption. Increased demand has also come from Japan, where Kansai Electric reported on April 30 that it expects power generation to rise in the next fiscal year (April 2024-March 2025). Similarly, Kyushu Electric is forecasting increased Coal imports due to lower nuclear plant utilization rates, dropping from 90.8% to 88.1%.

In the South African market, Coal prices rose modestly by 1%, driven by low stockpiles and steady demand from India and the Asia Pacific. Inventories at the Richards Bay Coal Terminal (RBCT) have rebounded from their previous lows, supported by high demand from India and the Asia-Pacific region. Last week, there was significant activity from Indian sponge iron and cement producers, as well as traders, further boosting the Coal market.

According to ChemAnalyst, Coal prices are expected to rise due to increasing demand. This rise is likely to be driven by robust activity in the Asia-Pacific (APAC) region, particularly from downstream iron and cement producers as well as traders. The market is seeing growing consumption, reduced production, and stock replenishment ahead of the summer season. Many market participants are optimistic about price quotations in the medium term, predicting that production in China will not increase significantly, while demand will continue to outstrip supply due to the high utilization of cooling capacities. The increased demand during the summer season, coupled with reduced production, is likely to lead to a further rise in Coal prices in the upcoming months.