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Japanese coal imports sink as LNG competition steps up

  • Spanish Market: Coal
  • 16/09/20

Japanese thermal coal imports fell sharply in August and fared much worse than LNG receipts, as generation economics continued to tip gradually in favour of greater gas burn.

Japanese thermal coal receipts fell by 1.1mn t on the year or 12pc to 7.9mn t in August, according to provisional finance ministry data, pushing year-to-date imports further behind the curve of previous years.

January-August imports totalled 70mn t, the lowest eight-month intake in more than seven years and down from 73.4mn t at the same stage last year and the 2016-18 average of 74.1mn t.

August imports fell on the year even as power generation data suggest a recovery in fossil fuel-based output to almost the same level as last year. Only three of the 10 major utilities have published power data for August, but the available figures suggest that national generation from fossil fuels recovered to an average of 84.3GW last month, which would be only narrowly down from 85.6GW in August last year.

Fossil fuel-based generation fell by an average of 3.8GW on the year in January-July on slow demand during a mild winter and the impact of Covid-19 restrictions later on, but unseasonably hot conditions in August helped slow the downward trend. Daily mean temperatures in Tokyo were 1.5°C higher than the long-term average last month and 0.72°C higher than in August 2019.

But firmer power demand and comparatively firm fossil fuel-fired generation was not enough to counter a steep drop in Japanese demand for seaborne coal. Two factors probably weighing on demand last month are high utility stocks in the country and a greater preference for LNG, as gas prices continue to gain in competitiveness against coal for power.

Utility coal stocks rose to 9.9mn t as of the end of May — the latest data available — as a result of slower demand, which was up from 9.4mn t 12 months earlier and the highest since before April 2016.

But increasingly competitive LNG prices — or a forced increase in consumption in response to high stocks and an oversupply of contractual import volumes — may have been a bigger factor weighing on seaborne coal demand last month. Japanese LNG receipts were only 3pc lower on the year at 5.8mn t, compared with the 12pc decline in coal receipts.

Japan's average LNG import costs fell by 45pc on the year in August to a 15-year low of just $5.62/mn Btu, driven by the collapse in oil prices, to which a majority of term LNG volumes are linked, this spring. This was down from $7.30/mn Btu in July and over $10/mn Btu 12 months earlier.

Average import costs for coal were down by only 32pc on the year at $72/t, the customs data show.

At these costs, the implied tax-inclusive generation cost for a 60pc gas plant and a 38pc coal plant would be $33.88/MWh and $29.36/MWh, respectively, according to Argus analysis. The implied $4.52/MWh cost advantage for coal-fired generation last month was down from nearly $19/MWh in August 2019, reflecting a greatly diminished incentive for utilities to run coal ahead of gas for power generation.

Australian coal imports sink

Australian coal accounted for around a half of the overall decline in Japanese imports last month.

A maximum of 5.3mn t of Australian coal was received, according to the customs data, although some of this total may include Colombian, South African or other origins of coal that are not differentiated in the provisional data. Japan imported 5.8mn t from Australia in August 2019.

Imports from Russia were flat on the year at around 1.4mn t, while receipts from Indonesia grew by 21pc to 990,000t.

Japanese fossil-fuel-based generation GW

Implied generation costs in Japan $/MWh

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06/11/24

Mozambique’s Maputo port halts receipt of coal cargoes

Mozambique’s Maputo port halts receipt of coal cargoes

London, 6 November (Argus) — Mozambique's Maputo port has stopped accepting cargoes after the main entry point for trucking South African coal to the port was temporarily shut today because of rioting in the area. Authorities issued advisories to close the Lebombo port of entry, the main trucking route that links South Africa to Maputo, after media reports surfaced of trucks being torched in Mozambique. "[Maputo Port Development Co], in co-ordination with customs and other relevant Mozambican border authorities, has taken the decision to stop reception of cargo at the Port of Maputo," the operator told customers on Wednesday. Unrest in the country began after national elections on 9 October when the ruling party declared victory with a disputed 71pc of votes and extended its 49-year rule. Opposition to the election results in Mozambique has led to country-wide protests, now escalating to violence and rioting. Mozambique Ports and Railways Authority (CFM) issued a communique on 6 November informing customers about suspension of rail operations to ensure safety of staff and operators. On Monday, truck drivers were instructed to park on the side of the road and leave their vehicles. Customs officials also did not allow truckers to leave Mozambique for South Africa with any processed goods. Sources told Argus that traders were desperately looking for truckers to move coal bound for Maputo to Richards Bay instead "to make up for lost volumes". Trucking rates in South Africa are shooting up as a result. This will "lead to consolidation at non-RBCT ports or higher sales prices", a South Africa based trader said. "[The] implied demurrage has gone up at Richards Bay's Multipurpose and Dry Bulk terminals because of port queues," he added. Maputo serves as an increasingly important export port for South African coal producers who have taken to trucking or railing coal across the border owing to the transit problems South Africa's state-owned rail operator Transnet Freight Rail is experiencing. About 2.7mn t of South African thermal coal was exported from Maputo between January to October this year, according to Kpler data. The coal export figure stood at 5.48mn t for 2023. The dry bulk terminals at Maputo are privately owned by infrastructure operator Grindrod. It has 7.5mn t of export capacity for managing coal and magnetite. By Ashima Sharma Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Trump nears victory in US election: Update 3


06/11/24
06/11/24

Trump nears victory in US election: Update 3

Updates throughout with latest election results, market reaction Washington, 6 November (Argus) — Former president Donald Trump appears to be closing in on victory in the US election, after winning several key swing states. Trump, the Republican nominee, was declared the victor in Georgia and North Carolina shortly after midnight ET on election night, according to the Associated Press. Trump has also won the key state of Pennsylvania, several US networks said. Trump was leading vice president Kamala Harris in all four other key swing states — Wisconsin and Arizona, Michigan and Nevada — based on partial results as of 02:00 ET (07:00 GMT) on 6 November. The seven swing states will decide which candidate reaches the threshold of 270 electoral votes needed to win the election. Trump had secured 248 electoral votes as 02:00 ET, with Harris at 214. Victory in Pennsylvania, if confirmed, would give Trump 267 votes and all-but end Harris' chances of victory. The prospect of Trump's re-election sent Brent crude futures down by as much as 2.5pc to a low of $73.64/bl, largely reflecting gains in the US dollar. A strong dollar tends to weigh on prices of commodities by making purchases more expensive for buyers using other currencies. Trump has promised to pursue a radical shift for the US on policies related to energy, taxes, trade and foreign affairs — reversing many of the policies and legislation that Democrats have put in place under President Joe Biden. On energy policy, Trump said he wants oil and gas producers to "drill, baby, drill" to bring down domestic energy prices and to dismantle many of the regulations and climate policies put in place by Biden, which Trump dubbed the "Green New Scam". Trump said he would immediately lift a "pause" on licensing new LNG export terminals and restart oil development in Alaska's Arctic National Wildlife Refuge. Trump wants to impose a 20pc tariff on all foreign imports and even higher tariffs on China. The next president faces decisions on the future of US support for Ukraine and related restrictions on Russian energy exports, enforcing US sanctions against Iran and Venezuela and how to contain the growing threat of an Israel-Iran war and its potential impacts on oil flows from the Middle East. Republicans also took control of the US Senate for the first time in four years. In the US House of Representatives, too many races are undecided for major networks to project control. In 2025, the US Congress is poised for a major fight on tax policy because of the year-end expiration of an estimated $4 trillion in tax cuts. By Chris Knight, Haik Gugarats and Kevin Foster Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Trump takes early lead in swing states: Update 2


06/11/24
06/11/24

Trump takes early lead in swing states: Update 2

Updates throughout with latest election results Washington, 5 November (Argus) — Former president Donald Trump is leading election tallies in a number of states crucial to winning the White House, but the final outcome of the presidential contest may take longer to determine. As of 11pm ET on Tuesday, Trump, the Republican nominee, was ahead of vice president Kamala Harris in Georgia and North Carolina, with almost 90pc counted in each state. With partial results in, Trump is running ahead of Harris in Pennsylvania, Wisconsin and Arizona, while she has a slight lead in Michigan. Ballot counting just now is getting underway in Nevada. The seven swing states will decide which candidate reaches the threshold of 270 electoral votes needed to win the election. Trump has promised to pursue a radical shift for the US on policies related to energy, taxes, trade and foreign affairs — reversing many of the policies and legislation that Democrats have put in place under President Joe Biden. On energy policy, Trump said he wants oil and gas producers to "drill, baby, drill" to bring down domestic energy prices and to dismantle many of the regulations and climate policies put in place by Biden, which Trump dubbed the "Green New Scam". Trump said he would immediately lift a "pause" on licensing new LNG export terminals and restart oil development in Alaska's Arctic National Wildlife Refuge. Trump wants to impose a 20pc tariff on all foreign imports and even higher tariffs on China. The next president faces decisions on the future of US support for Ukraine and related restrictions on Russian energy exports, enforcing US sanctions against Iran and Venezuela and how to contain the growing threat of an Israel-Iran war and its potential impacts on oil flows from the Middle East. In the US House of Representatives, too many races are undecided for major networks to project control. But in the US Senate, Republicans appear likely to win control for the first time in four years, with West Virginia governor Jim Justice (R) flipping a seat held by senator Joe Manchin (I), who is retiring. In 2025, the US Congress is poised for a major fight on tax policy because of the year-end expiration of an estimated $4 trillion in tax cuts. By Chris Knight and Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US elections undecided as some polls close: Update


06/11/24
06/11/24

US elections undecided as some polls close: Update

Updates with changes throughout Washington, 5 November (Argus) — Early voting results from key US swing states point to a tight race between former president Donald Trump and vice president Kamala Harris, with the outcome carrying high stakes for energy policy, trade and climate change. Pennsylvania, Michigan, Wisconsin, North Carolina, Georgia, Arizona and Nevada are the swing states that will decide which candidate reaches the threshold of 270 electoral votes needed to win the election. Early results from Georgia point to a slight advantage for Trump relative to his 2020 results in that state, which President Joe Biden then carried by nearly 12,000 votes. But early voting results also point to slight gains for Harris in some demographic segments relative to Biden's 2020 performance. That would make election results in Wisconsin, Michigan and Pennsylvania — which typically take days to complete the count — crucial for determining the outcome. Winning all three states would secure a victory for either candidate. In the US Senate, Republicans have a pathway to win control with a 51-49 majority by flipping one more seat, after West Virginia governor Jim Justice (R) was declared the winner in that state's Senate race by the Associated Press. Democrats are defending seats in close races in Montana, Ohio, Michigan, Pennsylvania and Wisconsin. If the Senate is tied, control will go to the party that wins the presidential election. Even before polls closed today, Trump said there was a "lot of talk about massive CHEATING in Philadelphia" in a post on his social media site, in a rerun of his strategy in the 2020 election of making unsubstantiated claims about voting. Harris, in a campaign speech on Monday in Pennsylvania, said the election offered a chance to "turn the page on a decade of politics that have been driven by fear and division". Trump has focused heavily on energy policy and voter frustration about inflation in his bid for a second term. US motorists were paying an average of $3.07/USG for regular grade gasoline in the week ended on 4 November, the lowest price in 10 months, but still higher than at any point in Trump's first term. On the campaign trail, Trump has promised to bring down energy prices through a policy to "drill, baby, drill" and dismantling President Joe Biden's signature climate initiative, the Inflation Reduction Act. Harris has pledged to support the 2022 law and other Biden energy policies , such as continued support for electric vehicles. Harris has disavowed her 2019 pledge to ban hydraulic fracturing. But oil and gas companies remain concerned about restrictions on federal leasing and efforts to electrify the vehicle fleet if she is elected. The next president will decide key questions on energy policy, such as the licensing of new US LNG export facilities and regulating carbon emissions from power plants, oil and gas facilities and vehicles. The election will carry equally high stakes for companies involved in metals , agriculture and other commodities. Trump is planning a combative approach to trade, with a 20pc tariff on all foreign imports and even higher tariffs against China. In 2025, the US Congress is also poised for a major fight on tax policy because of the year-end expiration of an estimated $4 trillion in tax cuts. On foreign policy, the next president will face decisions on the future of US restrictions on Russian energy exports and US sanctions against Iran and Venezuela and how to contain the growing threat of an Israel-Iran war and its potential impacts on oil flows from the Middle East. Polls also show a tight race in the fight for control of the US House of Representatives, where Republicans hold a 220-212 majority and where up to 22 seats are deemed competitive, election ratings firm Cook Political Report says. By Chris Knight and Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

RBCT coal stocks edge above 4mn t


05/11/24
05/11/24

RBCT coal stocks edge above 4mn t

London, 5 November (Argus) — Coal stocks at South Africa's Richards Bay Coal Terminal (RBCT) reached 4.02mn t in the week to 3 November, crossing the 4mn t mark for the first time since 2022. The build came amid elevated coal prices and curtailed demand from utilities in key markets such as India. Inventories were about 57,000t higher on the week, as state-owned rail operator Transnet Freight Rail delivered 1.11mn t to the port. Despite coal exports pegged at 1mn t from 28 October to 3 November, the overall lag in demand is evident in a lack of spot deals. Notably, shipments to South Korea were similar to those headed for India, which usually takes the majority of RBCT shipments. Exports to India stood at 526,000t, while South Korea-bound deliveries were 438,000t. A Capesize vessel also left for China. The recent downturn in India's coal intake has been partially offset by the South Korean demand, which has been supported by a recent flurry of tenders by South Korean state-controlled utilities refraining from bidding for Russian coal. Market participants were expecting demand from Indian sponge iron utilities to pick up after the Diwali holidays but are "yet to see any signs of recovery", a trader said. Prices for NAR 6,000 kcal/kg coal have been rangebound at $109-113/t for a month, which Indian buyers say is higher than usual, cutting into their production margins. Separately, the arbitrage for Capesizes to move from Richards Bay to Rotterdam was open all of last week, closing only on 4 November, but elevated South African NAR 6,000 kcal/kg coal prices have eroded the origin's discount to the market — giving Colombian coal an advantage. Argus assessed South African NAR 6,000 kcal/kg coal at $110.21/t on 4 November, with Richards Bay to Rotterdam freight for Capesize vessel on the same day at $9.40/t. By Ashima Sharma RBCT coal stocks 000't Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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