The prices of varying grades of seaborne thermal coal in Asia are witnessing divergence due to distinct demand patterns. Strong demand for high-quality thermal coal by Japan and South Korea has led to a rally in prices of premium-grade coal. However, lackluster imports by China and India have resulted in stagnation and declining prices for lower-quality coal.

The Newcastle Index, evaluating coal with an energy content of 6,000 kcal/kg from Australia, witnessed a notable rise to $141.59 per metric ton in the week ending Dec. 8. This surge marks the third consecutive weekly gain, amounting to a 17.5% increase from its recent low in mid-November.

Moreover, the high-grade thermal coal prices surged to $149.36 per metric ton on Dec. 8 on the globalCOAL platform, showcasing physical cargoes trading at a premium to the index, signifying an upsurge in demand.

Japan and South Korea, being significant consumers of high-grade coal, are driving this surge in prices due to increased imports. Japan's December imports are anticipated to reach their highest since March, with strong figures expected for Australia-originated coal. Similarly, South Korea's December imports are projected to be the highest since July 2021, with an uptick in Australian coal imports.

However, in contrast to this robust demand, China and India demonstrate muted interest in seaborne thermal coal. Both countries favor lower-energy coal, leading to reduced demand and subsequent declines in prices for Indonesian and Australian coal with lower energy content.

The Indonesian thermal coal prices dropped to $58.40 per metric ton, reflecting a 5.3% decline from its recent high in October. Similarly, Australian coal with an energy content of 5,500 kcal/kg experienced a drop of 11.9% from its peak in mid-October, ending at $93.28 per metric ton in the week ending Dec. 8.

The softened prices for lower-rank thermal coal reflect the diminished demand from major buyers China and India amidst their preference for lower-energy coal grades.