GLOBAL ASIA

Asia's seaborne thermal coal imports hit record high as prices slip: Russell

Asia's imports of seaborne thermal coal surged to the highest on record in May as cheaper prices tempted buyers in the region's developing economies. A total of 78.38 million tonnes of the fuel used primarily to generate electricity is likely to be offloaded across Asia in May, according to data compiled by commodity analysts Kpler. This is the most in Kpler data going back to January 2017, while Refinitiv data also shows record imports in May in data stretching back to January 2015.

The robust May outcome comes on the back of strength in both March and April, with those two months being the second- and third-strongest months according to Kpler data. Rising thermal coal imports come as seaborne prices for the fuel continue to decline, with two of the more popular grades slipping to 16-month lows in the week to May 26.

Indonesian coal with an energy value of 4,200 kcal/kg IDIDX42GRW1=ARG slipped to $65.28 a tonne, the lowest since January 2022 and just over half of the peak of $120.86 reached in March last year in the wake of Russia's invasion of Ukraine. Both these grades are popular in China and India, the world's two biggest coal importers, as well as in other developing Asian economies such as Vietnam, Thailand and Malaysia.

Indonesia eyes energy transition plan by August

Indonesia aims to finalize a broad plan to guide its energy transition ambitions by August as the country tries to reduce its carbon footprint. The country's energy ministry (ESDM) said it is working with the ministry of state-owned enterprises (BUMN), the ministry of finance, and state-owned utility PLN to complete the Comprehensive Investment and Policy Plan (CIPP), which will serve as the framework for Indonesia's energy transition through the Just Energy Transition Partnership (JETP).

The CIPP will focus on developing new transmission networks, building base load and peak load renewable energy power plants, new plans for the early retirement of coal-fired power plants, and creating a renewable energy supply chain, the ESDM said. Indonesia plans to reach net zero by 2060. New renewable energy power plants and smaller plants need to be connected to national grids via the new transmission systems to contribute to the country's electricity supply, ESDM added.

Indonesian thermal coal prices show mixed trends in May

Indonesian thermal coal prices showed mixed trends across different grades. High-calorific value (CV) coal (5800 GAR) prices dipped to $114.96/t. On the other hand, low-calorific value (CV) coal (3600 GAR) prices edged up to $53.51/t. High CV prices showed a rise by up to $4.85/t.

PTBA, Indonesia's state-owned coal miner, had announced force majeure after a landslide disrupted its coal hauling operations from railway provider, KeretaApi Indonesia (KPA) on 27 April, 2023. The incident is likely to affect the miner's calendar year 2023 (CY23) target of producing 41 mnt and hauling 32 mnt of coal by rail.

Earlier, in 2022, PTBA produced 37 mnt of coal, of which 28.8 mnt were hauled by rail. The derailment has impacted transportation of coal from TanjungEnim mine in South Sumatra province, PTBA's largest mine to Tarahan Port. The force majeure led to vessel loading schedules being postponed.

Indonesia to issue draft carbon market regulation

Indonesia's Financial Services Authority (OJK) aims to issue by 12 June an initial draft of technical regulations for setting up the country's carbon exchange. The initial draft will be submitted to various ministries for harmonisation, with the final rules expected to be published in July. The OJK is aiming for formal operations of the carbon exchange market to begin in September this year, with an initial trade volume of 100mn t of carbon dioxide (CO2).

Setting up a national carbon exchange is part of the government's efforts to reduce CO2 emissions in line with its net zero target. Indonesia plans to reach net zero by 2060 and has announced a series of measures aimed at reducing the country's carbon footprint.

The country's energy ministry (ESDM) said it is working with the ministry of state-owned enterprises, the ministry of finance and state-owned utility PLN to complete the Comprehensive Investment and Policy Plan, which will serve as the framework for Indonesia's energy transition through the Just Energy Transition Partnership.

China fuels economic recovery with higher coal imports, not LNG, in Q1

China increasingly turned to coal imports during the first quarter to help power its economic recovery from the COVID-19 lockdowns, while its appetite for costly LNG sourced from the global market declined. Following a number of measures to bolster domestic coal production, global receipts and coal-fired power generation going forward, China’s focus on self-sufficiency has also dampened the anticipation of a resurgence in LNG demand that could have sent global gas prices rocketing akin to 2022.

China’s coal production rose 5.5% on the year to 1.15 billion mt in the first three months of 2023 while imports jumped 63.1% on the year to 101.8 million mt in the same period, according to official government data.

China has also resumed trading coal with Australia since mid-January, ending an unofficial ban imposed in 2020, while it also signed in March a joint statement to build closer energy cooperation ties with Russia.

Albanese government gives go ahead to new coal mine

The Albanese administration came to power on a platform that positioned it as more climatefriendly than the outgoing Morrison administration, although it did not specifically promise to ban new coal mines.

Environment minister Tanya Plibersek said that there was strong justification for approving the Isaac River mine. “It met the standards under the Environment Protection and Biodiversity Conservation Act as it is at the moment. This is a small project. It’s next to five other coal mines. It’s been a mining area for decades,” she said.

“It’s a project that produces metallurgical coal, which is the coal you need for steel making. There’s no renewable energy future that doesn’t have steel in it.” Comparing it to Adani’s controversial Carmichael coal mine in Queensland, she said: “It’s less than 1% the size of Adani, and it will go for five years versus, something like 60 years for Adani”.

Australia’s exports to China hit record high as relations thaw

Australia’s exports to China hit a record high in March, as Chinese buyers snapped up Australian commodities from coal to iron ore amid a thaw in bilateral relations. The country’s shipments to China reached 19 billion Australian dollars ($12.8 billion) in March, up 28% from the previous month and 31% from the same period a year ago, according to data released by the Australian Bureau of Statistics.

In particular, thermal coal exports to China surged 122% in March from a year earlier to $238 million. Shipments of iron ore lump and iron ore fines to China also jumped 28% and 22.5%, respectively, to $380 million and $973 million.

The Chinese government said Morrison’s request was “political manipulation,” and since then imposed a series of trade restrictions on Australian products, including barley, lobsters and coal. But the frosty relationship has shown signs of thawing since last year when the Labor party swept to power in Australia.

Australian thermal coal mine aims for Q4 restart on supply deal

Australia Pacific is on track to restart a thermal coal mine in New South Wales State in the fourth quarter after it secured a supply agreement with a global coal buyer, it said . The miner has been restructuring its operations and looking for finance as it prepares to produce 3 million tonnes per year of coal from its mine in the Hunter Valley which has been closed since 2006.

"The Dartbrook Joint Venture is currently finalising funding arrangements to meet future restart capex and working capital needs," Australia Pacific Coal said in a release to the securities exchange.

A significant portion of the project's expected funding will be linked to a new coal marketing and supply agreement, and negotiations with an international third party with extensive global coal marketing experience are in the final documentation stage.

South Africa can keep coal fired plants running longer, climate committee says

South Africa’s top climate policy body suggested the government could delay retiring its ageing coal-fired power plants to address electricity shortages, adding a power crisis had put the country on track to meet its climate goals anyway. South Africa’s governing African National Congress has recommended that state power utility Eskom delay the decommissioning of its ageing coal-fired power stations to help minimise rolling electricity outages.

However, it is also committed to a plan partly funded to the tune of $8.5 billion by the United States, Britain, France, Germany and the European Union to accelerate a shift away from coal and towards solar and wind energy. Cyril Ramaphosa has said that the total cost could prove ten times higher than what Western donors are offering to finance.

South Africa is heavily reliant on coal for electricity. As a result, it coughed out 430 megatonnes of CO2 in 2021, making it the world’s 14th biggest carbon emitter, according to the latest data from Global Carbon Atlas. That put it ahead of Britain, Mexico and Australia, all of which are much bigger economies.

Ramokgopa insists South Africa won’t transition away from coal in darkness

The Minister of Electricity, KgosientshoRamokgopa, has warned that South Africa will not transition away from coal-fired power stations in darkness. He said the lights must be on before South Africa moves away from coal to renewable energy and this position has been explained to the international community that pumped in $8.5 billion for the Just Energy Tran- sition programme.

Ramokgopa said during a question-and-answer session in the National Council of Provinces on Tuesday that they have had to halt plans to decommission some of the power stations because of the critical need for energy. South Africa was in the midst of power cuts and it could not afford to remove more megawatts from the grid.

He said between 2018 and 2020 more than 2 900MW were removed from the grid as part of transitioning from coal. There were plans to cut another 5 200MW from power stations as part of the just transition programme in the next few years.

United States

US, Australia agree on minerals, emissions, energy pact

The US has agreed to work with Australia on greenhouse gas (GHG) emissions reduction, with US president Joe Biden promising to advocate for Australia's inclusion for tax credits under his $369bn Inflation Reduction Act (IRA).

Australian Prime Minister Anthony Albanese announced the bilateral cooperation under a climate, critical minerals and clean energy transformation compact, establishing climate and clean energy as a "central pillar" of the USAustralian alliance.

Albanese welcomed the IRA as the "largest ever action" to tackle climate change, but concern has been building about the effects the tax credit policy will have in drawing renewable energy investment away from key US allies such as Japan, the EU and Australia, while also harming foreign manufacturers.

Albanese said Biden will push the US Congress to treat Australian suppliers and activity as "domestic activity in the United States" for the purpose of the Defense Production Act, given that the nations work together on nuclear submarines.

Storing hydrogen in coal may help power clean energy economy: Research

Coal may provide a potential new way to store hydrogen gas, much like batteries store energy for future use, addressing a major hurdle in developing a clean energy supply chain, according to a study. Hydrogen is a clean burning fuel and shows promise for use in the most energy intensive sectors of the economy like transportation, electricity generation and manufacturing, the researchers said.

However, much work remains to build a hydrogen infrastructure and make it an affordable and reliable energy source, they said. This includes developing a way to store hydrogen, which is currently expensive and inefficient.

Geologic formations are an intriguing option, the scientists said, because they can store large amounts of hydrogen to meet the peaks and valleys as energy demand changes daily or seasonally. "Coal is well-studied, and we have been commercially producing gas from coal for almost a half century.

U.S. at risk of blackouts this summer

Extreme weather this summer will strain the U.S. power grids, putting two-thirds of North America at risk of electricity shortfalls this summer during periods of peak demand on the hottest days, the North American Electric Reliability Corporation (NERC) said this week in its reliability assessment.

In a normal summer with around-usual temperatures, the grid would cope as resources are adequate to meet demand. However, if temperatures in the summer spike above norms and heat waves sweep through North America, the U.S. West, the Midwest, Texas, Southeast, and New England, plus Ontario in Canada, may face supply shortages, NERC said in its 2023 Sum-

mer Reliability Assessment.

NERC has been warning about the grid’s vulnerability to extreme weather every year in the past few years as retirements of generators of stable dispatchable power have raised the risk of power shortfalls. “Increased, rapid deployment of wind, solar and batteries have made a positive impact,” Mark Olson, NERC’s manager of Reliability Assessments, said.

European thermal coal buyer’s eye reselling in Asia amid sufficient stockpile

With decent thermal coal stockpiles at European ports, along with lower coal demand due to strong natural gas storage levels and renewable energy generation, market participants in Europe are looking to tap the Asian market to resell their products, sources told S&P Global Commodity Insights. The development comes at a time when thermal coal demand in Asia is lackluster due to strong domestic production and lower-than-expected temperatures, even as prices have fallen to levels not seen at least in the last three months.

Market sources in Asia said they have received several offers from European participants, particularly for high calorific value coal, used by the majority of their thermal power plants. “I bought a shipment from Poland recently and have some more offers for coal above 5,500 kcal/kg NAR. Since global prices have fallen considerably, Europeans are ready to sell even at some loss or the product quality will continue declining,” a large India-based buyer and trader said.

China and India, which are the two biggest drivers of the Asian thermal coal market have large- ly remained on the sidelines putting pressure on Indonesian coal prices, while South African prices have also suffered a setback due to added competition in the global market.

Europe’s unwanted coal heads to China and India as heat builds

Coal cargoes unwanted in Europe are heading to Asia, where utilities are stockpiling the fuel amid sweltering temperatures heading into the summer. Shipments of about 7 million tons of Colombian coal will be exported to Asian countries in the next quarter, according to chief executive officer of Berge Bulk Ltd.

European customers raised their imports of Colombian coal last year by 23 per cent to about 30 million tons, according to data from shipbroker BRS Group, after the continent was plunged into an energy crisis following Russia’s invasion of Ukraine. However, with natural gas prices dropping more than 90 per cent since August, more power plants are switching back to the alternative fuel.

The extra arrivals in China will add to burgeoning inventories at coastal ports. The country has ramped up imports at the same time as expanding domestic production to feed the reopening of its economy. But demand hasn’t kept up as China’s recovery has disappointed.

Moscow discussing with Pyongyang cargo, coal transshipment in Rajin Port – Ambassador

Russia expects transportation of its cargo, including coal, for transshipment in the North Korean port of Rajin to begin soon, Russian Ambassador to Pyongyang Alexander Matsegora said in an interview. "We expect that soon the transportation of Russian cargoes intended for transshipment in the port of Rajin, mainly coal, will begin. This matter is being actively discussed now," Matsegora said.

In November 2022, freight railway traffic between Russia and North Korea resumed in regular mode and the cargo was now transported through the only border railway crossing point, Khasan-Tumangang, the ambassador said. Trade routes between Russia and North Korea were frozen by Pyongyang in early 2020 over concerns about the COVID-19 pandemic.

The Khasan-Rajin project was launched several years ago and was intended to deliver cargo by rail from Russia to the North Korean city of Rason with subsequent shipment by sea to ports in other countries.

Global thermal coal prices settling into $200 per tonne range after volatile 2022

Global thermal coal prices are stabilising this year in a range near $200 a tonne that is less than half of 2022’s record highs, analysts and industry officials say, with rising supplies providing respite to consumers roiled by last year’s volatility. Analysts expect the benchmark Newcastle coal index to average $175-$212 a tonne this year, a steep premium to the $86 average for the ten years preceding Russia’s 2022 invasion of Ukraine, but down more than 50% from September’s highs at $440.

Coal prices in the tighter range expected this year, though, will help utilities and other users better plan fuel purchases, easing pressure on economies battling high inflation. Fuel prices typically account for more than half the total cost of generating electricity.

Argus Consulting expects global coal exports to rise 4.4% this year, with imports set to increase 5%. China is seen ramping up imports by 11%, with Australian exports rising 9.4% after declining for three straight years. July Ndlovu, chairman of the World Coal Association (WCA) and chief executive of South Africa’s Thungela Resources, said Europe’s “disproportionate” role in deciding coal prices was over.