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Turkish coal plants to widen their cost advantage in 2Q

  • Market: Coal
  • 23/02/21

Rising natural gas import costs could extend coal's advantage for thermal power generation in Turkey in the second quarter.

Pipeline import costs for state-owned gas distribution company Botas are set to increase steeply when the next quarterly adjustment is made in April, because of recent strength in oil and oil product prices. They could rise by around $3/MWh to more than $20/MWh, according to Argus calculations, assuming prices for oil and oil products remain flat for the rest of the quarter. This would imply a generation cost of more than $35/MWh for a 55pc-efficient gas-fired unit, assuming Botas reflects the higher import costs in its tariffs for gas utilities, compared with a cost of $34.75/MWh with the current tariff.

Botas does not have any obligations to pass through any increase or decrease in import costs to gas-fired power utilities, but it has rarely offered tariffs below its import costs.

The company this month hiked its regulated tariff for power utilities by 1pc to 1,428.15 lira/'000m³ ($19.11/MWh), despite import costs remaining unchanged in dollar terms at around $17.50/MWh.

Meanwhile, prevailing coal prices do not suggest that coal-fired generation costs will rise in April-June. The API 2 second-quarter contract stood at $63.75/t yesterday, meaning utilities will face an unchanged import cost of around $70/t. Utilities' import costs are topped up to $70/t by a variable tax that is levied on imports when the API 2 is below $70/t. This means that implied generation costs for 40pc-efficient coal-fired plants will remain at around $25/MWh.

Turkish coal-fired utilities are already operating with favourable margins, as reflected in recent strong load factors. The country's 8.9GW fleet of plants that run on imported coal has had a utilisation rate of around 90pc since the beginning of this month.

A widening cost advantage against gas would ensure there will be no cost-driven fuel switching in the next quarter, but coal burn is expected to soften regardless in April-May, when hydropower output usually reaches its annual peak.

Most coal-fired utilities schedule their annual maintenance for April-May, as higher hydropower output weighs on the need for thermal generation. But this year some coal-fired units are expected to come off line for longer than normal, as logistical disruptions caused by Covid-19 prompted some utilities to reduce the extent of maintenance works last year.

Hydro reserves remain at a deficit

Turkish hydropower reserves fell on the year last week, dropping to 36.3pc of capacity from 39pc a year earlier.

But stocks in the Firat-Dicle basin, where most key hydropower units are located, were flat on the year at 35pc.

Aggregate hydropower output in April-June 2020 fell by 6.37TWh on the year to 24.80TWh, while water reserve levels dipped to 57-69pc from 63-78pc. Any potential weakness in hydropower output in the second quarter of this year would increase the call on thermal generation.

Turkey hydropower vs coal-fired generation TWh

Coal vs gas generation costs $/MWh

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07/02/25

Trump planning rollout of 'reciprocal' tariffs

Trump planning rollout of 'reciprocal' tariffs

Washington, 7 February (Argus) — President Donald Trump is considering announcing "mostly reciprocal tariffs" on an undisclosed number of countries early next week, in a possible shift from a campaign plan to impose universal tariffs of 10-20pc against all imports to the US. Trump did not provide specifics on the idea, but said he would probably have a meeting on 10 or 11 February before making an announcement. The potential rollout of the reciprocal tariffs appears likely to take place after China's planned 10 February date to start collecting a 10pc tariff on crude, coal and LNG from the US that Beijing imposed in response to a 10pc blanket tariff that Trump has placed on Chinese imports. "I think that's the only fair way to do it," Trump said of his plan to "probably" pursue reciprocal tariffs. "That way, nobody's hurt. They charge us, we charge them. It's the same thing. And I seem to be going in that line, as opposed to a flat fee tariff." Trump has said he views tariffs — which he says is his "favorite word" — as a virtually cost-free way to raise revenue that will cut the US trade deficit and boost domestic manufacturing, without raising prices for goods in the US. But earlier this week, Trump delayed his plan to place an across-the-board 25pc tariff on Canada and Mexico just hours before it was set to take effect, as stock markets began to plunge on the threat of the start of a damaging trade war between the US and its two largest trading partners. The vast majority of economists say across-the-board tariffs are an inefficient way of raising revenue, with costs that would fall the hardest on low-income and middle-income US consumers already reeling from years of inflation. US Senate minority leader Chuck Schumer (D-New York) on 2 February said kicking off a tariff war with Canada and Mexico "makes 100pc no sense" and would raise costs for US consumers. Trump discussed his reciprocal tariff idea today during a press conference with Japan's prime minister Shigeru Ishiba. Trump said he wants to "get rid of" the US' trade deficit with Japan he estimates is $100bn/yr, primarily by selling the country US oil, LNG and ethanol. Trump said he also spoke with Ishiba about efforts related to the "pipeline in Alaska", an apparent reference to the proposed 20mn t/yr Alaska LNG project, which is expected to cost more than $40bn and would require building a natural gas pipeline across Alaska. Ishiba said it was "wonderful" that Trump had lifted a temporary pause on LNG licensing on his first day in office, and said Japan was interested in purchasing US LNG, ethanol, ammonia and other resources as a way to cut down on the US trade deficit with Japan. "If we are able to buy those at a stable and reasonable price, I think it would be a wonderful situation," Ishiba said through a translator. Japan is keen to increase its overall investment in the US to $1 trillion, Ishiba said. By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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South Africa has 44mn t/yr coal projects in pipeline


03/02/25
News
03/02/25

South Africa has 44mn t/yr coal projects in pipeline

Cape Town, 3 February (Argus) — South Africa currently has 16 project proposals for mostly thermal coal projects in the pipeline with an aggregate capacity of 44mn t/yr, according to the IEA. Globally, new or expanded coal mines aimed at the export market with a total capacity of 430mn t/yr are planned, the IEA says in its Coal 2024 Analysis and forecast to 2027 report. Last year coal consumption in Africa increased by 6mn t to 191mn t, the IEA estimates, driven mainly by South Africa's higher coal consumption owing to an improved performance by state-owned Eskom's electricity plants. In the near term, the IEA forecasts modest growth in Africa's total coal demand to 203mn t/yr by 2027. South Africa increased its coal consumption to 165mn t last year on improved economic activity and less load shedding. The country is by far the biggest coal consumer in Africa, accounting for 86pc of the continent's coal consumption in 2023. Strong electricity demand growth is expected to create room for an additional 14 TWh of coal-fired generation in South Africa over the next three years, the IEA predicts. Three coal-fired power plants of 4.5GW capacity that were due to shut by 2027 will run until at least 2030 . Hence the IEA projects that South Africa's coal consumption for power generation will rise to 124mn t by 2027. "The future of coal demand in South Africa will be shaped by policy makers' decisions regarding the coal-fired power fleet, either to invest in their maintenance to keep them running for longer or to phase them out," the IEA says. Coal production in South Africa grew marginally over the past two years to 234mn t in 2024, the IEA estimates. The main challenges to increasing production have been an unstable electricity grid and frequent disruptions to coal transport as state-owned Transnet has struggled with collisions, equipment failures, cable theft, derailments, power outages and increased costs. Last year, South Africa's Canyon Coal started shipments from its Gugulethu mine that is set to produce 2.4mn t/yr, half of which will be NAR 5,500 kcal/kg fob RB thermal coal. After years of being in administration, the Optimum coal mine was added to the project pipeline after new owner Liberty Coal settled outstanding legal issues related to the mine. Liberty plans to increase Optimum's capacity to 11mn t/yr of mid-CV thermal coal, but the mine first needs significant reconstruction. Until 2027, the IEA expects coal production in South Africa and most other African countries to remain flat, apart from Ethiopia where a new coal mine will slightly boost output, the IEA said. But growing steel production in Mozambique and Zimbabwe is set to propel coal production. In Mozambique, India's state-controlled Steel Authority of India (Sail) will invest up to $200mn over the next four years to double the capacity of its Benga coking coal mine to 4.5mn t/yr. Most of the mine's output is intended for Sail's internal use in India. In Zimbabwe, Chinese firm Tsingshan Holding's Dinson Iron and Steel (Disco) unit started production last year, with initial capacity of 600,000 t/yr to be expanded to 5mn t/yr once the plant is complete. In addition, Mozambique, Zimbabwe and Botswana plan a major infrastructure project, which includes a new deepwater port at Techobanine, south of Maputo, that will cost up to $1.5bn. Botswana plans to revive a long-standing project to create a 1,700km rail link through Zimbabwe to Maputo, enabling the landlocked country to export its coal reserves estimated at over 200bn t. South African infrastructure operator Grindrod will take full ownership of the Matola Coal Terminal in Mozambique by spending $77mn to acquire Vitol's 35pc stake. Grindrod then intends to expand the terminal's capacity beyond its current 7mn t/yr. Thai Mocambique Logistica plans to construct a coal port at Macuse in Mozambique and build a railway line to connect the port with coal mines in Tete province. Neighbouring Malawi also aims to import coal from Tete via a rehabilitated railway from Balaka to its capital Lilongwe. "The country is seen as a favourable option for coal exports compared to South Africa, whose ports are expected to reach capacity limits," the IEA says. Elaine Mills Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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US manufacturing expands in Jan after 26 months: ISM


03/02/25
News
03/02/25

US manufacturing expands in Jan after 26 months: ISM

Houston, 3 February (Argus) — US manufacturing activity expanded in January after 26 consecutive months of contraction, according to the Institute for Supply Management's latest factory survey. The manufacturing purchasing managers' index (PMI) registered 50.9 in January, up from 49.2 in December. The new orders index rose to 55.1 last month from 52.1 in December, marking a third month of expansion. Readings above 50 signal expansion while readings under that point to contraction. Production rose to 52.5 last month from 49.9 the prior month. Employment rose to 50.3 from 45.4. "Demand clearly improved, while output expanded and inputs remained accommodative," ISM said. "Demand and production improved; and employment expanded." US factory activity expanded robustly in the first two years after Covid-19 hit, then contracted for the subsequent two years, even as growth in services activity, the largest part of the economy, maintained the overall economy in expansion territory. The new export orders index rose by 2.4 points to 52.4 and the imports index rose by 1.4 points to 51.1. The prices index rose to 54.9 from 52.5, with aluminum, freight rates, natural gas, and scrap among gainers. "Prices growth was moderate, indicating that further growth will put additional pressure on prices," ISM said. The inventories index fell by 2.5 to 45.9, signaling contracting inventories. Backlog of orders fell by one point to 44.9, indicating order backlogs contracted for the 28th consecutive month after 27 months of expansion. Supplier deliveries rose by 0.8 to 50.9, suggesting marginally slower deliveries. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Australia’s BCC on track to meet coal sales target


29/01/25
News
29/01/25

Australia’s BCC on track to meet coal sales target

Sydney, 29 January (Argus) — Australian coal producer Bowen Coking Coal (BCC) is on track to meet its 1.6mn-1.9mn t sales guidance for the year to June 30, but low stockpiles and rail and port access could hinder the target. The Queensland coal producer managed record sales of 544,000t of coal in October-December , but cut its stockpiles to 127,000t on 31 December from 172,000t on 30 September. These stockpiles were the lowest end-of-quarter levels since BCC started producing in late 2022, and might need to be rebuilt in January-June, weighing on sales. Sales could also be impacted by increased vessel arrivals at Dalrymple Bay Coal Terminal, which BCC ships through, and increased wet weather forecast for February-April . BCC is negotiating to secure more port and rail capacity, although it has met its "near-term" requirements. The firm's managed production ran at a rate of about 3mn t/yr run of mine (ROM) in October-December, down from the 5mn t/yr ROM rate it targeted for 2024 in early 2023 , but at the top end of guidance of 2.7mn-3mn t/yr to 30 June. Wet weather in Queensland has seen the premium for top-grade coking coal decline relative to second-tier hard coking coal owing to lower availability, according to BCC. Argus last assessed the premium hard coking coal price at $185/t fob Australia on 27 January at a premium of $34.95/t to lower-grade hard coking coal. This premium is down from an average of $39.24/t for January and $37.52/t for October-December, but above the $24.59/t average in July-September. Non-premium hard coking coal prices fell to a $15/t premium to high-grade thermal coal in early September, before widening to nearly $40/t on 24 January. Thermal coal sales made up 42.5pc of BCC's sales in October-December, with the rest coking coal, up from 40pc in July-September. BCC has the option to swing some production between thermal and lower grades of coking coal but this takes time to implement. Argus last assessed the hard coking coal price at $151.05/t fob Australia on 27 January, down from $157.90/t on 30 December and at the lowest level since June 2021. Argus last assessed high-grade 6,000 kcal/kg NAR thermal coal at $113.85/t fob Newcastle on 24 January, down from $123.44/t on 27 December. By Jo Clarke Bowen Coking Coal (BCC) Oct-Dec '24 July-Sep '24 Oct-Dec '23 Jul-Dec '24 Jul-Dec '23 BCC managed production (kt) ROM 788.8 768.8 785.2 1,557.6 1,425.6 Saleable coal 482.4 443.5 478.7 925.9 1,023.8 BCC sales volumes (kt) Metallurgical coal 312.8 248.8 264.8 561.5 567.4 Thermal coal 231.1 166.0 238.4 397.1 492.4 Total 543.9 414.8 503.2 958.6 1,059.8 BCC's average realised price ($/t) Metallurgical coal 165.8 179.2 210.0 171.7 192.0 Thermal coal 88.5 93.4 100.3 138.1 144.7 Argus average prices ($/t fob Australia) Premium hard low-volatile coking coal 202.6 210.5 333.6 206.5 298.4 Hard coking coal 165.1 185.9 277.0 175.6 250.6 6,000 kcal/kg thermal coal 137.5 138.4 139.8 137.9 147.3 — BCC, Argus Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Trump touts off-grid gas, coal for AI data centers


24/01/25
News
24/01/25

Trump touts off-grid gas, coal for AI data centers

New York, 24 January (Argus) — President Donald Trump said he plans to give developers "very rapid approvals" to build data centers running artificial intelligence (AI) software, as well as off-grid electric generating facilities to power them. "I'm going to give emergency declarations so they can start building them almost immediately," Trump told the World Economic Forum in Davos, Switzerland, in virtual remarks on Thursday. Allowing for a rapid increase in power generation capacity will enable the US to scale up its AI capabilities and be competitive with China, he said. Trump said he has been telling developers that he wants them to build electric generating facilities next to their planned data centers. These would bypass connection to the grid, which he said is "old" and unreliable. The developers will be able to fuel their generators with "anything they want," including natural gas, and could use "good, clean coal" as a back-up in case a gas pipeline were to explode, cutting gas supplies to a data center's off-grid gas power plant, he said. Trump's comments echo those made recently by executives in the oil and gas industry, who are betting that tech giants' desire to quickly build out data centers to develop their own AI software will force them to eschew the long, arduous interconnection process through which new customers connect to the grid, and instead secure their own personal supply of electricity generated by natural gas. ExxonMobil in December said it was in talks to provide AI data centers with "fully islanded" gas-fired power, which could be installed "independent of utility timelines" and at a pace that other baseload generation fuel sources, like nuclear, could not match. Alan Armstrong, chief executive of Williams, the largest US gas pipeline company, told Argus that AI data center operators are going to build in states where they can quickly secure off-grid electricity supplies. By Julian Hast Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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