-Steam coal market on downtrend in 2024-

In 2023, Australia's FOB New Castel market for steam coal started in the $340's. Prices soared worldwide due to the aftermath of the market trend in 2022, when supply was short along with Russia's invasion of Ukraine. However, the market hit the highest for 2023 at $372.00 on Jan 6. The market tumbled from the second-half January and were staying almost in the $100's in March onwards. The market lacked vibrancy in November and December although a high demand winter season was approaching in the Northern Hemisphere.

The reason why the market sharply dropped from the record high in 2022 is that demand increase was less than initially expected in Europe in winter. In Europe last winter, demand for liquified natural gas (LNG) and coal were forecast to grow so as to prepare for a disruption of natural gas flow from Russia. Demand was, however, low amid mild weather. As a result, high inventories pushed down global coal prices. The trend was unchanged throughout the year.

The trend might continue in 2024. The market has already factored in a reduction in supply from Russia. In Asia, demand remains sluggish and steam coal demand might retreat in China. Furthermore, at the 28th session of the Conference of the Parties (COP28) to the UN Framework Convention on Climate Change (UNFCCC) in Dubai in November through December 2023, movements to ban construction of new coal thermal power stations and to phase out operations of existing facilities were strengthening mainly among European nations and the US. In Japan, coal thermal power generation accounts for nearly 30% of total electric power source but import volumes of steam coal were below the previous year's level in the second half of 2023.

Nevertheless, China and India strongly oppose these policies as they largely rely on coal thermal power generation. These countries are increasing investment in renewable energy but still regard coal power generation as a major power source for the time being. There are no signs that coal consumption volume would decrease worldwide. Therefore, some players reckon that coal prices would not fall as expected.

Steam coal import volume and price in Japan