- CIF ARA coal rises to $137/t; Atlantic export prices show mixed weekly movements
- Low gas storage, disrupted LNG supply support winter buying, despite softer German coal generation
European thermal coal prices remained supported in late September as utilities prepared for winter against a backdrop of low gas inventories, expensive LNG and Middle East supply disruptions. However, stronger wind generation and late-season warmth restrained immediate fuel demand, producing a market driven as much by supply security as current consumption.
CIF Amsterdam-Rotterdam-Antwerp (ARA) 6,000 NAR coal reached $137/t on 29 September, up $2.45/t from 22 September. Atlantic export markets moved unevenly: South African coal strengthened, US Gulf prices edged higher, while Baltimore and Colombian prices eased.
Gas storage leaves a thinner winter cushion
EU gas storage was approximately 70% full on 25 September, around 12 percentage points below the year-earlier level. Germany’s storage was only about 57% full in reporting dated 28 September. These lower inventories increase sensitivity to cold spells and interruptions to incoming supply.
The European Commission nevertheless confirmed on 25 September that EU gas supply remained stable. Expanded import infrastructure and lower gas consumption provide resilience, but the market enters winter with less stored protection. ENTSOG’s winter preparedness findings, due on 8 October, will be an important assessment of that balance.
For coal, the implication is precautionary procurement: utilities and heating operators have an incentive to secure fuel before weather-driven demand accelerates.
LNG disruption sustains coal’s competitive appeal
The Middle East conflict and restrictions on shipping through the Strait of Hormuz remain central to energy sentiment. The Commission reported in early September that Qatari LNG production remained shut down, while European heatwaves had increased gas consumption for power generation.
The supplied reports placed Northeast Asian spot LNG at $25.88/MMBtu on 22 September, compared with $10.70/MMBtu on 27 February. Expensive LNG strengthens coal’s relative appeal where generators can switch fuels and increases competition between Europe and Asia for available cargoes.
Gas markets did soften subsequently: Dutch TTF year-ahead prices declined from €57.37/MWh on 22 September to €54.86/MWh on 29 September. These forward prices should be distinguished from prompt gas, which was trading at substantially higher levels.
Weather and wind temper immediate coal burn
Winter preparation has not yet translated into uniformly stronger generation demand. The 21 September report forecast German temperatures approximately 4.8°C above seasonal averages by 30 September, suggesting a delayed build-up in heating requirements. That was a short-range forecast, rather than evidence of a mild winter ahead.
Wind had an even clearer immediate effect. During the week ended 20 September, German wind generation increased almost 50% to an average 18.6 GW. Hard-coal generation fell nearly 20% to 3 GW, lignite declined almost 15% to 8.1 GW, and gas generation dropped 10% to 4.4 GW.
German day-ahead electricity prices consequently fell nearly 20% to €135.26/MWh, even as gas prices at the hub rose 2% to €80.28/MWh. The divergence demonstrates that expensive gas alone does not guarantee stronger coal burn: wind output and residual electricity demand remain decisive.
Carbon also limits switching. December EU allowances stood at €85.89/t on 29 September, imposing a significant cost on coal-fired generation.
Atlantic flows show winter procurement, but supply remains available
Colombian thermal coal exports declined 9% week on week to 1.10 mnt during 21-27 September. Nevertheless, the Netherlands received 0.51 mnt, approximately 46% of shipments, while the UK and Poland together accounted for another 0.12 mnt. These are destination-tagged shipments, rather than confirmed arrivals or consumption.
The shift towards northwest Europe is consistent with winter procurement, although Colombian FOB prices still declined. Delivered costs also matter: the reports’ implied Colombia-northwest Europe freight indicator increased from $18.84/t on 22 September to $24.75/t on 29 September, absorbing part of the benefit from softer origin prices.
Poland’s government maintained that domestic and imported coal would cover winter requirements, despite increased demand associated with higher gas prices. The outlook therefore centres on replenishment and delivery reliability rather than an established Atlantic-wide shortage.
BigMint assessment: winter premium faces a weather test
European coal retains support from low gas stocks, LNG disruption and precautionary buying. However, strong wind, mild autumn conditions and carbon costs can restrain generation demand and cap price gains.
The critical upside scenario is a combination of cold weather, weak wind and prolonged LNG disruption. Conversely, sustained warmth, dependable gas deliveries and continued renewable output would weaken the need for additional coal purchases. The 29 September ARA forward curve-Q4 2026 at $136.95/t and Q1 2027 at $136.10/t shows winter risk being priced, without a sharply higher premium for the first quarter.
Leave a Reply