Coal stocks at key global hubs fall by half in 1H 2021

Market: Coal, Electricity, Emissions, Natural gas
21/09/21

The ratio between coal stocks and daily consumption or use across key global hubs almost halved on the year by the end of June according to Argus analysis, amid recovering demand and a sluggish supply response this year.

Coal stocks — expressed as the number days of local consumption or throughput — were 47pc lower on the year at less than 40 days in June, nearing the bottom of the 2017-19 range. This is according to Argus analysis based on available data for the US, China, India, Japan, the Amsterdam-Rotterdam-Antwerp (ARA) transshipment hub in Europe and the Richards Bay Coal Terminal in South Africa, and weighted according to each market's share of the combined inventory.

The annual decline compared with the middle of 2020 reflects a tighter supply-demand balance in 2021, which has been a key factor in driving seaborne prices higher and remains a risk ahead of the northern hemisphere heating season.

The so-called days-of-use indicator shows how many days current stocks would last, based on the latest rate of consumption. It provides more context about the fundamental supply-demand balance than looking at the absolute level of coal stocks, as it also factors changes in consumption trends.

There are two main drivers behind the decline in global days of use. First, global supply constraints in 2021 driven by inclement weather early in 2021, reduced railing and discharging capacity and mining disruption from safety checks, strikes and protests. Second, a compounding impact from rising coal burn in some markets, particularly China and India, driven by firm power demand, and gas-to-coal switching in the Atlantic because of surging gas prices. Both factors have created a perfect storm for a tight global fundamental balance so far in 2021.

China and India stocks wane on firm coal burn

Chinese power utility stocks account for around 36pc of the total sample in Argus' calculation, and therefore have a large influence on the aggregate figure.

Mining accidents, continuing safety checks and the unofficial ban on imports from Australia have all hampered supply in China this year, while thermal power generation, which is largely coal-fired, has surged with the wider economy during China's post-pandemic recovery.

As a result, Chinese utility stocks have plummeted from 17 days of use in October 2020 to only seven days in March 2021 and hovered below 10 days until June, the lowest range since March 2017.

Similarly, in India, coal-fired generation has grown strongly in 2021, pressuring outright and days-of-use stocks. At the end of August, the government urged utilities to consider increasing imports to boost availability.

The power ministry has also asked state-controlled coal producer Coal India (CIL) to meet its supply targets to help build the stocks, well ahead of the winter season when coal transportation is also affected by fog. CIL has already said it will raise supplies to power plants with low coal stocks.

The tight stock balance in both China and India could lend additional and early support to spot demand ahead of the upcoming winter season, and poses an upside risk to prices if stocks remain low and leave the market exposed in the event of unusually cold conditions.

Strong Asian premium pares ARA supply

Days of use at the ARA hub in northwest Europe halved on the year in June but remain relatively high at 100 days.

Absolute port stocks are down on the year, while coal-fired generation has recovered on gas-to-coal switching and subdued renewables output, pressuring the days-of-use indicator. But northwest European coal burn remains much lower than in the years before the pandemic, meaning days-of-use stocks are still relatively high by historic standards.

In addition to supply constraints affecting Colombian exports to Europe, Asian coal markets held a wide premium to Europe in the first half of the year, which helped to draw some flexible supply out of the Atlantic and limited the recovery in overall supply. This helped to accelerate the decline in days-of-use stocks in northwest Europe.

By Yahdian Falah

Global coal stocks mn t

Global days of use, API2 month-ahead swaps (RHS) days, $/t

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News

01/04/25

US oil, farm groups push EPA for steep biofuel mandate

New York, 1 April (Argus) — The American Petroleum Institute and biofuel-supporting groups told Environmental Protection Agency (EPA) officials at a meeting today that the agency should sharply raise advanced biofuel blend mandates for 2026. The coalition told EPA that it supported a biomass-based diesel mandate next year of 5.25bn USG, up from 3.35bn USG this year, and a broader advanced biofuel mandate, including the cellulosic category, at 10bn Renewable Identification Number (RIN) credits, up from 7.33bn RINs this year, according to three different groups that attended the meeting. Both mandates would be record highs for the Renewable Fuel Standard (RFS) program. Soybean oil futures and RIN credit prices have risen sharply over the past week on optimism that oil and biofuel interests were working to coordinate volume mandate requests for consideration by President Donald Trump's administration. The coalition is also pushing the agency to set a total conventional volume requirement at 25bn RINs, which would keep an implied mandate for corn ethanol flat at 15bn USG. Ethanol groups had previously eyed a mandate even higher, but limits on the amount of ethanol that can be blended into gasoline make much more-stringent requirements a tough sell to oil refiners. The coalition provided no specific request for the cellulosic biofuel subcategory, where most credit generation comes from biogas. Credits in that category are more expensive, but price concerns have been less potent recently given an EPA proposal to lower previously set cellulosic obligations, signaling that future volume requirements can be cut, too. EPA is aiming to finalize new RFS volume mandates by the end of the year if not earlier, people familiar with the administration's thinking have said. EPA officials signaled at the meeting they were working urgently on the rulemaking. "The agency is intent on getting the RFS program back on the statutory timeline for issuing renewable volume obligation rules," EPA said, declining to comment further on its plans for the rule. The RFS program requires oil refiners and importers to blend biofuels into the conventional fuel supply or buy credits from those who do. Under the program's unique nesting structure, credits from blending lower-carbon biofuels can be used to meet obligations for other program categories. One gallon of corn ethanol generates 1 RIN, but more energy-dense fuels earn more RIN credits per gallon. Some disagreements persist While groups at the meeting were aligned around high-level mandates, how administration officials and courts treat small refinery requests for exemptions from RFS requirements could undercut those targets. Groups present were broadly aligned on asking EPA not to grant widespread exemptions, though there is still disagreement in the industry about how best to account for exempted volumes when deciding requirements for other refiners. Groups present at the meeting today included the American Petroleum Institute and representatives of biofuel producers and crop feedstock suppliers. Some groups that previously engaged with the coalition's efforts to project unity to the Trump administration were not present. And some groups more historically skeptical of the RFS and more supportive of small refinery exemptions — including the American Fuel and Petrochemical Manufacturers — have not been closely involved. Fuel marketer groups notably did not attend the meeting after a representative sparred with others in the coalition at an American Petroleum Institute meeting last month. Some retail groups, including the National Association of Convenience Stores and the National Association of Truck Stop Operators, instead sent a letter to EPA today arguing that the groups pushing steep volumes are discounting potential headwinds to the sector from new tax credit policy. Some of the groups advocating for higher biofuel volumes have pointed to high production capacity and feedstock availability, but have preferred to ignore thornier issues like tax credits, lobbyists say. "An overly aggressive increase in advanced biofuel blending mandates under the RFS will be punitive for American consumers" without extending a long-running $1/USG tax credit for biomass-based diesel blenders, the retailers' letter said. That incentive expired last year and was replaced by the Inflation Reduction Act's "45Z" credit, which offers subsidies to producers instead of blenders and throttles benefits based on carbon intensity. Generally lower credit values for biomass-based diesel — coupled with the US government's delays setting final regulations on qualifying for the credit — have spurred a sharp drop in biofuel production to start the year. Without a blenders credit, the RFS volume mandates pushed by some groups could increase retail diesel prices by 30¢/USG, the fuel marketers estimate, a potential political headache for a president that ran on curbing consumer costs. Other biofuel groups say that extending the credit would be an uphill battle this year, with some lawmakers and lobbyists instead focused on legislatively tweaking the 45Z incentive's rules to benefit crop feedstocks instead of reverting wholesale to the prior tax policy. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Find out more

News

Next US tariffs to take effect 'immediately'

01/04/25

News

01/04/25

Next US tariffs to take effect 'immediately'

Washington, 1 April (Argus) — President Donald Trump plans to announce a sweeping batch of tariffs on Wednesday afternoon that will take effect "immediately", the White House said today. Trump will unveil his much anticipated tariff decision Wednesday at 4pm ET during a ceremony at the White House Rose Garden. While the administration has announced the effective date, there is little clarity on what goods will face tariffs at what rates and against which countries, leaving the government agencies that will be tasked with enforcing new tariffs largely in the dark. "The president has a brilliant team of advisers who have been studying these issues for decades, and we are focused on restoring the golden age of America and making America a manufacturing superpower," the White House said today, brushing off criticism from economists, industry groups and investors. Economic activity in the US manufacturing sector contracted in March as businesses braced for Trump's tariff threats. Trump has previewed or announced multiple tariff actions since taking office. The barriers in place now include a 20pc tariff on all imports from China, in effect since 4 March, and a 25pc tax on all imported steel and aluminum, in effect since 12 March. A 25pc tariff on all imported cars, trucks and auto parts, is scheduled to go into effect on 3 April, the White House confirmed today. Trump and his advisers have previewed two possible courses of action for 2 April. Trump has suggested that all major US trading partners are likely to see a broad increase in tariffs in an effort to reduce the US trade deficit and to raise more revenue for the US federal budget. But Trump separately has talked about the need for "reciprocal tariffs", contending that most foreign countries typically charge higher rates of tariffs on US exports than the US applies to imports from those countries. In that scenario, high tariffs become a negotiating tool to bring down alleged foreign barriers to US exports. Treasury secretary Scott Bessent told Fox News on Monday night that the second course is the one Trump is more likely to take. Trump will announce "reciprocal tariffs" and "everyone will have the opportunity to lower their tariffs, lower their non-tariff barriers, stop the currency manipulation" and "make the global trading system fair for American workers again", Bessent said. But the White House insisted today that the new tariffs will not be a negotiating tool. Trump is "always up for a good negotiation, but he is very much focused on fixing the wrongs of the past and showing that American workers have a fair shake", the White House said. Trump's words and actions already have drawn retaliatory tariffs from Canada and China, and the EU is preparing to implement its first batch of counter-tariffs in April. Trump, for now, has deferred his tariff plans for imported Canadian and Mexican oil and other energy commodities. But the US oil and gas sector, which depends on pipelines and foreign-flagged vessels to transport its crude, natural gas, refined products and LNG, will feel the effects of tariffs on imported steel and proposed fees on Chinese-made and owned vessels calling at US ports. By Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

Mexican peso weakness may partially offset US tariffs

01/04/25

News

01/04/25

Mexican peso weakness may partially offset US tariffs

Mexico City, 1 April (Argus) — Volatility in the peso/dollar exchange rate may help to partially offset any tariffs that US President Donald Trump decides to impose on imports from Mexico as the ensuing peso depreciation would make its exports more competitive, said analysts from US bank Barclays. President Trump will announce Wednesday his next decision related to the threat to impose a 25pc tariff against imports from its commercial partners Mexico and Canada. Trump has delayed the decision twice, and it is likely that he will do so again, given the serious repercussions the tariffs could cause to the US economy, said Latam chief economist at Barclays, Gabriel Casillas, during a webinar held Monday. The base scenario for Barclays is that Trump's administration will finally step back from imposing tariffs on Mexico and Canada and rather go for an early renegotiation of the (US Mexico Canada Free Trade Agreement (USMCA) this year, said Casillas. In this scenario, the Mexican peso would strengthen to between Ps19.5 to Ps19.00 to the greenback, he added. However, if Trump's administration decides to impose the 25pc tariffs on all Mexican imports as he has threatened to do, then the peso would weaken to Ps24/$1, said Erik Martinez, foreign exchange research Analyst at Barclays during the same webinar. "If tariffs were imposed, 25 percent on all imports, we think a good portion of this would be absorbed by the exchange rate," said Casillas. A weaker peso makes Mexican exports more competitive abroad. The Mexican peso on Tuesday was trading at around Ps20.30 to the dollar, and has weakened by 18.5pc in the past year from about Ps16.6 to the dollar a year ago. If President Claudia Sheinbaum's administration avoids the tariffs, the peso may strengthen to around Ps 19.00/$1 in upcoming days, said Martinez. If the tariffs are applied during a brief period or only for the automobile sector, the exchange rate could range between Ps21.00-22.00 per dollar, said Martinez. However, even without any tariff being applied, Mexico's economy is expected to grow only by around 0.7pc this year, less than the estimates made late in 2024 of around 1.4pc, due to the deceleration of the US economy, Mexico's main trading partner, said Casillas. The US economy is showing signs of slowing down, specially in the industrial sector, which will impact Mexico's growth for the year. Also, this uncertainty is directly affecting any upside expected from so-called nearshoring as companies would now lose interest in moving their manufacturing lines to Mexico if there is no clear benefit in using the USMCA to avoid tariffs, said Casillas. By Édgar Sígler Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

French nuclear modulation to step up this summer

01/04/25

News

01/04/25

French nuclear modulation to step up this summer

London, 1 April (Argus) — Modulation in the French nuclear fleet, and the consequent gap between nuclear availability and output, is set to grow in the coming weeks as consumption falls in summer and solar output picks up. But the fleet's ability to modulate, touted as one of its great strengths, could be put to the test by growing amounts of intermittent renewable capacity, without any accompanying rise in consumption or in flexible storage capacity. France's flexible nuclear plants are unusual in being able to modulate their output downwards, with each reactor capable of dropping twice a day to 20pc of rated output. Nuclear reactors by their nature have high fixed costs and low variable costs. But operator EdF still reduces production in hours in which prices fall below these low variable costs, widening the gap between the theoretical available capacity and actual production. And low-priced hours became more common last year, particularly in the summer, in the middle of the day and on weekends, as low demand coincided with high nuclear and renewable production. The gap between availability and output across the fleet typically has held at 1-2GW on a monthly basis in recent years. But last summer, it jumped to 4GW on average in each month from April-August ( see availability-output gap graph ). And so far this year it has averaged 2GW, compared with 1.8GW in the same period last year. Modulation has held higher too, with the difference between maximum and minimum daily nuclear output averaging 4.6GW, up from 3.2GW last year ( see modulation graph ). Solar output so far this year has averaged 2.4GW, up by 35pc on 1.8GW in the same period in 2024, after France's solar fleet grew by 5GW, or roughly a quarter, over 2024. As output increases with longer days, this will begin translating into increasingly more output centred around midday, driving stronger modulation. Modulation becomes political Modulation has this year become a political football, with the government promoting the parallel growth of nuclear and intermittent renewables, while an insurgent faction, typically on the political right, claims that more renewables are at best wasteful and at worst actively damage the nuclear fleet. France's nuclear fleet has always modulated, as its large size means residual demand is lower than capacity in low consumption periods. But the extent of this modulation grew sharply last year. Lower consumption contributed to this, as did the growth of renewables. Much of France's renewable capacity is not exposed to market prices, as it is remunerated by feed-in tariffs, and has no incentive to shut down when prices fall below zero. Even the minority of capacity that is required to halt production when prices fall below zero in order to retain subsidy still can produce at prices only slightly above zero, or below the marginal cost that drives EdF to modulate down nuclear output. Operator EdF defends its ability to modulate. The firm's nuclear chief, Etienne Dutheil, last year told a senate commission that the fleet's ability to modulate was the "envy" of other operators. And modulation has "very few effects" as long as it is partial and does not require a total shutdown that makes the plant cool down, he said. The firm told the senate enquiry that thus far, there is "no proven statistical link between modulation and a possible loss of production or increased failures of plants". But modulation could increase wear on reactors' secondary circuits and consequently increase maintenance needs, it said. Proponents of a combined nuclear and renewables approach say that meeting France's goals for electrifying end-uses will require a large volume of extra electricity in the coming years, which potential new nuclear plants — planned for the second half of the next decade at the earliest — will not be able to deliver in time. But opponents decry the combination of nuclear and renewables as wasteful, given that EdF does not save on any of its hefty fixed costs when modulating down nuclear plants to make way for zero-marginal cost renewable output, essentially putting a double burden on consumers that have to pay twice for two separate generating fleets. And others put forward the damage that they say modulation does to the nuclear fleet. Rassemblement National (RN) leader Marine Le Pen raised the topic in a written question to the government last month, asserting that modulation "prematurely ages pipes and welds of reactors". And even some internal EdF documents present modulation in a less benign light than the firm's chiefs. The combination of renewables and nuclear leads to power output fluctuations that are "never insignificant in terms of safety, especially of the control of the reactor core, and the maintainability, longevity and operating costs of our facilities", according to a 2024 report by the company's chief nuclear safety inspector. The PPE3 energy plan, which the government hopes to finalise in law imminently, commits France to rapid increases in renewables deployment. If the plan's objectives are followed, intermittent output will grow in the coming years. The plan also aims for a rapid increase in consumption to soak up the extra power produced. But potential drivers of electrification such as heat pumps and electric vehicles had their subsidies slashed in the 2025 budget. Increased storage capacity could be a way to integrate more intermittent renewables. France already has pumped-storage sites that can add up to 3.8GW of flexible demand during peak output periods. But battery storage is little developed in France, thanks partly to these pumped-storage sites and to nuclear modulation, both of which limit intra-day spreads. As battery capacity grows, it typically quickly saturates the ancillary services market and these wholesale spreads will become increasingly important for making battery projects profitable. By Rhys Talbot Nuclear availability-output gap GW Daily nuclear modulation (max-min output) Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

Singapore, Peru sign Article 6 carbon deal

01/04/25

News

01/04/25

Singapore, Peru sign Article 6 carbon deal

London, 1 April (Argus) — Singapore and Peru have signed an agreement to trade carbon credits under Article 6 of the Paris Agreement. The deal will provide the foundation for Singapore to hit its climate targets by buying carbon credits from Peru, while channelling finance to the latter for scaling its climate projects. Carbon credits traded under Article 6 are called Internationally Transferred Mitigation Outcomes (Itmos). They count towards the buyer's nationally determined contribution and must meet several criteria, such as featuring a letter of authorisation from the host country. Market sources have suggested that "logistical barriers" have complicated the issuance of letters of authorisation, heavily limiting the pool of credits that can be traded as Itmos. Towards the end of last month, the UN Framework Convention on Climate Change issued a template for letters of authorisation establishing precisely what information a host country must receive from project developers in order to authorise their credits for trade credits under Article 6. The deal is Singapore's first with a Latin American country, which host some of the largest nature-based projects in the world in reducing emissions from deforestation and degradation and afforestation, reforestation and revegetation project areas. Singapore has signed similar Article 6 agreements with Papua New Guinea, Ghana and Bhutan. By Felix Todd Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more