shine trader limited reports:
According to traders on the global coal electronic trading platform, the trading price of a batch of coal to be delivered at a major hub in Europe next month will be as high as US $200 per ton, the highest level since 2008. The traders said several European utility companies had entered the coal market this week to ensure supply before winter began. Since these transactions were conducted privately, the traders asked for anonymity.
Although winter is still a few months away, with the depletion of European natural gas reserves, local people seem to have felt the chill of “winter is coming” – an energy crisis is likely to sweep the whole European continent at that time.
It is not easy to replenish these natural gas inventories. The limited supply of Russia and Norway this year has forced Europe to compete with Asia for LNG in the spot market. At the same time, the shortage of wind power has also exacerbated the energy dilemma of the European continent, which has prompted many utility companies to turn to dirtier fossil fuels to make up for the supply shortage.
“We have noticed that the coal market is beginning to be a little tight. The profits of coal-fired power plants have turned positive and began to increase production,” Marco saalfrank, head of business transactions in continental Europe of Axpo solutions AG, said at the GASTECH summit in Dubai this week
The surge in energy prices comes as Europe is trying to promote a more ambitious climate agreement at the United Nations climate conference in Glasgow, Scotland, later this year. The return of coal may make politicians in Britain, Spain and Italy criticized during the meeting, while on the other hand, they will have to deal with voter opposition caused by rising energy bills.
According to traders, not only did the spot price of coal rise, but the price of coal futures for delivery next year also soared by 4.1% to $139 per ton, the highest level since 2008. Increased demand for utilities is depleting inventories at European ports.
At present, due to the rainstorm in Colombia and Indonesia, the main coal producing countries, and the closure of some mines in other regions due to the epidemic, the coal supply has decreased. In recent years, investment in new mining projects has almost stagnated, and banks have cut loans to coal companies as the world seeks to avoid the worst effects of climate change. Energy Danmark, a trading group, said in a recent report, “like the natural gas market, the coal inventory level in the whole Europe is very low, and the coal supply from Russia has also decreased recently.”
Dale Hazelton, head of power coal business at wood McKinsey, pointed out, “there is a shortage of natural gas supply, a shortage of coal supply, and the development of renewable energy is not very good – we are now in this crazy situation.