- Warm forecasts pressure ARA; gas, logistics risks persist
- Tight Atlantic supply increases reliance on Colombian coal
European thermal coal prices have retreated from mid-September highs as warmer weather forecasts, stronger renewable generation, and softer gas prices temper immediate utility demand. However, the correction masks a potentially tighter physical Atlantic market heading into winter.
CIF Amsterdam, Rotterdam, and Antwerp (ARA) 6,000 NAR fell from $139.05/t on 16 September to $133.30/t on 21 September, down around 4%.
Europe nevertheless faces several interconnected winter risks: relatively low gas inventories, uncertainty surrounding LNG supply, low Rhine water levels, disrupted Russian coal flows and limited availability of replacement high-CV coal from the US.
ARA prices have been volatile rather than consistently bearish. The benchmark fell to $137.05/t on 15 September, rebounded to $139.05/t the following day, before declining to $135.95/t on 18 September and $133.30/t by 21 September.
Weather turns bearish — for now
Europe is emerging from an exceptionally hot and dry summer characterised by heatwaves, drought and low river flows. The transition into autumn is reducing cooling demand, while stronger wind generation during some periods is displacing thermal power.
On 21 September, German power prices fell almost 20% as wind generation surged nearly 50%, demonstrating how quickly renewable availability can alter coal and gas generation requirements. Current seasonal indications lean towards a relatively mild winter, which would limit heating demand and coal burn.
However, seasonal forecasts remain uncertain. A colder-than-expected winter would rapidly change the demand equation, particularly if gas and LNG markets remain tight.
Gas remains coal’s strongest winter insurance
Natural gas remains perhaps the most important external driver for European coal. Europe is entering the heating season with relatively low gas inventories, while geopolitical disruption has increased uncertainty surrounding LNG availability. This leaves the region more exposed to colder weather and competition with Asia for flexible LNG cargoes.
Higher gas prices can materially improve coal-generation economics. Poland illustrates the relationship, with utility PGE expecting to burn around 2 mnt more hard coal in H2CY’26 as higher gas prices improve coal’s competitiveness.
Coal therefore retains value as an insurance fuel. A mild winter could leave much of that insurance unused; sustained cold combined with expensive or constrained LNG could quickly increase coal burn.
Rhine levels complicate inland supply
European coal availability also depends heavily on logistics. Persistent dry conditions have lowered Rhine water levels, forcing barges to reduce loads and increasing inland freight costs. Low Rhine levels continued to disrupt transportation during mid-September.
This creates a two-sided impact. Low water can suppress ARA buying because utilities struggle to move coal inland, while simultaneously raising delivered costs and increasing supply risks for German power plants.
Any sustained recovery in Rhine levels would lower logistics costs and facilitate stronger movement of coal from ARA terminals to inland consuming centres.
Colombia’s importance continues to grow
Atlantic supply patterns are simultaneously changing. Colombia is becoming increasingly important to Northwest Europe and the Mediterranean. FOB Colombia 6,000 NAR increased from $111/t on 11 September to $114/t on 18 September, while Mediterranean delivered prices also strengthened.
Poland’s H1 coal imports surged 168% y-o-y to 3.06 mnt, with Kazakhstan and Colombia among its principal suppliers, while Polish coal-fired generation increased 12%. Russian Black Sea availability has meanwhile tightened, encouraging Turkish buyers to seek alternatives, particularly Colombian coal.
CIF Mediterranean 75,000-t coal reached $135/t on 18 September, up $2/t w-o-w, while the 45,000-t assessment increased $3/t to $131/t.
Turkiye, Northwest Europe and other Mediterranean consumers are therefore increasingly competing for Atlantic tonnes, strengthening Colombia’s position as a key balancing supplier.
US coal offers limited near-term relief
The US would ordinarily represent another source of replacement Atlantic coal, but direct miner availability is currently extremely limited. Fresh Northern Appalachian 6,900 NAR coal is being offered around $120/t FOB Baltimore, with meaningful producer availability pushed out to February loading.
This substantially reduces the ability of US high-CV coal to respond quickly if European winter demand strengthens. At current transatlantic freight levels, February NAPP would also land in Europe at considerably higher levels than current ARA prices.
Illinois Basin coal is available at lower prices, with 6,000 NAR material offered around $85/t FOB New Orleans. However, its higher sulphur content limits its suitability for some European utilities and makes it an imperfect substitute for lower-sulphur Colombian coal.
The important point is therefore not the nominal price of US coal, but its availability. With high-CV US miner supply extremely tight, Europe cannot necessarily turn quickly to the US if Atlantic demand strengthens.
Geopolitics reshapes Atlantic flows
Geopolitics remains an important variable because disruptions can simultaneously affect LNG, oil, freight and coal trade flows.
Restricted Russian Black Sea coal availability is already changing Mediterranean trade patterns, redirecting buyers towards Colombia. Any further disruption could intensify competition between Turkey and Northwest Europe for Atlantic tonnes.
At the same time, renewed LNG disruption would increase competition between Europe and Asia for gas cargoes and improve coal-fired generation economics.
The interaction between gas availability and coal supply is therefore likely to become increasingly important as winter approaches.
Outlook
The Atlantic market is caught between softer near-term demand and potentially significant winter supply risks.
A mild, windy winter accompanied by improving Rhine levels and softer gas prices would pressure ARA coal. Colder weather combined with constrained LNG, weak wind generation, low river levels or further supply disruptions could produce the opposite outcome.
More importantly, physical replacement options appear limited. Fresh high-CV US coal is scarce, Russian Black Sea availability is constrained, and Colombian tonnes are increasingly being sought across Northwest Europe and the Mediterranean.
Europe may structurally be consuming less coal, but its remaining coal-fired fleet retains considerable value as insurance against gas and renewable-generation volatility.
The recent ARA correction therefore tells only part of the story. Prompt demand is softer, but Atlantic supply optionality remains constrained.
Four variables are likely to determine the next major move: European winter temperatures, Rhine water levels, gas and LNG prices, and Colombian coal availability.
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