MONTHLY FUEL SUMMARY

Indonesian Coal News:

Indonesia’s coal production levels to remain stable or even grow moderately in the medium term and are looking to meet an anticipated growth in power demand from developing Asian economies. Thermal coal will continue to support the credit quality of Indonesian coal-mining companies for the next four to five years, amid a slow and uneven phasing out of the fossil fuel in the Asia-Pacific, said analysts. A director at Fitch’s Asia-Pacific corporate ratings team, said that most coal companies’ plans to diversify away from thermal coal include Greenfield projects that might require more time to finance and execute.

Indonesia has set a tiered coal benchmark price based on calorific value and using a new formula to calculate the price starting in March, the energy ministry said. As per the ministry, the March coal benchmark price was set at $283.08 a tonne for coal with a calorific value of more than 6,000 kilocalories per kilogram, calculated based on an average coal selling price over the previous two months. Indonesia previously used an average price of the main coal indices to calculate the price. The new coal benchmark price came into effect from March 16.

Australian Coal News:

In Australia, benchmark price for coal used in power generation fell back to levels last seen before the Russia- Ukraine war. The weekly spot price for high-grade thermal coal shipped from the Australian port of Newcastle came to around $179.57 per tonne at the end of February, 60% cheaper than its all-time high in September. The price had soared after the invasion until mid-January, to around $400, as buyers sought alternatives to Russian coal and natural gas. The decline came as gas shortage in Europe reduced. A warm winter meant that less gas was consumed keeping inventories high for this time of year.

Abundant Australian coal supplies are flowing to China opening avenues for shipments in an increasingly oversupplied market this year. In February China saw the arrival of 207,000 tons including 73,000 tons of higher-grade coking coal from Australia as per custom data. The cargoes are Australia’s first set since Beijing imposed its unofficial ban in late 2020. The Chinese market is expected to be buoyant for steelmakers after Mongolia launched a new auction system that raised prices for them.

South African Coal News:

South African High-CV 6,000 prices rose above 135 USD/t driven by the growth in European demand, logistical constraints and increased demand from Indian consumers. According to reports, exports through South Africa’s Richards Bay Coal Terminal (RBCT) dropped to 7.1 mio t in the first two months of 2023. In addition, last week the visit of the President of South Africa to the event organized by the, led to a traffic jam of trucks (about 2,000 units) on their way to the RBCT terminal. In this regard, the operator Transnet has sent a notice to shippers, asking them to suspend supplies for at least 48 hours.

Coal exporting companies in South Africa are registering growth despite of not being able to completely exploit export opportunities due to rail logistics problems in the country. Exxaro Resources is one such company that reported a 28% jump in its annual profit, supported by higher coal prices, and also declared a lower dividend payout as the miner still faces rail logistics problems. Exxaro said it realized an average coal price of $251 per tonne last year, up from $96 in 2021, due to a price surge after the European Union banned coal imports from Russia following its invasion of Ukraine in February 2022.

European Coal News:

Russian coal exports to China through the Zabaikalsk-Majshauli railway crossing have increased by 214% since last year, according to government sources. Supplies totaled more than 438,000 tonnes in the first 40 days of 2023, with more than 6,200 freight cars of coal being sent to China. The supply of coking coal to the steel industry has also more than doubled as compared to last year. The EU import ban on Russian coal has caused Moscow to refocus its trade, resulting in an increase in Russian coal exports to China. In the Asian nation's Heilongjiang, Jilin and Liaoning provinces, as well as the eastern part of the Inner Mongolia Autonomous Region, Russian coal is used to generate electricity and heat.

The UK is likely to engage in negotiations to keep coal power units open next winter. The system operator confirmed it received a letter from the Department for Energy Security and Net Zero requesting that it explored the procurement of winter contingency contracts for additional capacity over the 2023/2024 winter. The National Grid put coal plants on standby to be used as an emergency backup during the past few months. The new agreements are expected to enable the units to be available again the next winter.

US Coal News:

In the US, Illinois basin and Appalachian coal prices will likely be stable following last year's spike and recent steep declines. Thermal coal prices in the Illinois basin and northern and central Appalachia doubled between October 2021 and July 2022 as domestic and international demand rose in the first half of the year. The last time prices went up by similar levels was in 2008, when Illinois basin and Appalachian coal more than doubled over the span of the first eight to nine months of the year.

US coal exports totaled 42.1mn t in 2022, as per trade data issued recently. The exports were 3.2% higher than a year earlier, while US coking coal output increased by around 3%, according to estimates. Russia's invasion of Ukraine in February 2022 and subsequent sanctions imposed on the import of Russian coal triggered a sharp increase in European buying from the US. US shipments to Japan rose by 21.8% in 2022 to 3.69mn t, largely driven by a period of strong precautionary buying at the start of the Russia-Ukraine war, and by robust demand towards the end of the year as Japanese buyers increasingly turned away from Russian coal.

Pet Coke News:

The global petroleum coke market size is expected to expand at a CAGR of 16.95% reaching USD 24072.74 million by 2028. The growth of the petcoke market is anticipated to depend on factors like surge in demand from major applications industries. Macroeconomic factors like global economic expansion, rapid urbanization, growing middle class population and the increased spending capacity of consumers will also drive the growth of key industries. High cost of products and availability of alternatives is a key factor that has been limiting the demand and adoption of the product in several regions..

Shipping Update:

Rates for Supramax petroleum coke voyages from the US Gulf coast to Rotterdam up over 8% on 14 March. In comparison, coal voyages from the US east coast to Rotterdam on Capesize and Panamax bulkers are down by 4% and 2%, respectively, over the same period. Atlantic Panamax rates have also dropped as the Chinese demand for Panamax-sized grain cargoes that helped to clear tonnage in the region over the last two weeks may now be shifting back to Ukrainian products following the renewal of the Black Sea grain corridor deal with Russia.

European ship-owners welcomed the EU’s proposed Net-Zero Industry Act. The Act can be a step-change in efforts to enhance Europe’s security and to support the energy transition of European industry. The new Industry Act aims to accelerate the decarbonisation of the European economy. As shipping is one of the most difficult to decarbonise sectors, the upscaling of affordable low- and zero-carbon fuels and technologies for the sector is key. The shipping industry is significant for European energy security, food security, and security of supply of goods.