Russian coal deliveries to Europe fell by
12% in the first half of 2022, with June shipments falling by 48% on the year.
The Newcastle 6,300 spot price will
average US$327/t in 2022, up 139% from the 2021 yearly average of US$137. Coal
prices will remain strong as gas prices in Europe increased after reports that
the pumping capacity of Nord Stream 1 will fall from 40% to about 22% of the
maximum capacity of the pipeline. AME forecasts that thermal coal prices will
fall to US$270 in 2023 and US$200 in 2024 as gas prices ease and coal trade
flows stabilise.
EU nations have agreed to reduce gas
consumption by 15% between August 2022 and March 2023. This will increase coal-fired
generation in the EU, as the region switches to other energy sources.
On the
supply side, Indonesian miners are considering lowering their 2022 targets as
unseasonal rains and shortage of heaving equipment hit production volumes. AME
forecasts a deficit of -15Mt of thermal coal in the market in 2022, a
continuation from the -12Mt deficit seen in 2021.
Global competition for coal is escalating
as power generators attempt to restock inventory levels. Japan’s Nippon Steel agreed
on a supply deal with Glencore for Australian thermal coal at US$375/t. The most
expensive contract ever recorded between the two companies will be valid
through March 2023. This agreement may be used as a benchmark price for other deals
in Asia, although this will further raise the cost of electricity.
Vietnam aims to shelve
over 14GW of future coal capacity from the national power development plan, as
part of its emissions reduction strategy to achieve net zero by 2050. With
energy transition drastically impacting funding in coal projects in Southeast
Asia, the share of coal in Vietnam’s energy mix will drop to 13% by 2045 from
an estimated 31% in 2030.
Vietnam’s electricity demand has surged
at a CAGR of 10% over the last five years. The country has one of the best renewable
resources in Southeast Asia. Hanoi plans to double its wind power capacity
with a US$13bn offshore facility developed by AES Corporation, a US energy
company.
Vietnam currently has about 4GW of wind capacity, which combined with
solar accounts for 27% of the total installed generation capacity in the
country. The government aims to install 11.7GW by 2030 and 66GW by 2045.
Glencore has sold
its 6.4% interest in Yancoal Australia in a deal worth A$422m (US$293m). The transaction
involved the sale of 84.5 million shares traded at A$5 (US$3.57) each. The deal closely follows Glencore’s alleged
rejection of Chinese Yankuang Energy’s offer to buy Glencore’s minority stake. Glencore’s
consolidation of its coal assets will remain unaffected, as the miner did not
consider the shareholding in Yancoal to be a core asset for the business.

