Europe’s winter drift: Gas weakness, strong wind, and softening coal complex

• Thermal coal under pressure as demand stays weak
• EU ETS strengthens despite soft fuel markets

Europe’s thermal coal market has entered a calm but decidedly bearish year-end phase. Prices are declining not because of supply shocks, but because of a quiet convergence of meteorological, power-market, and trading dynamics.

• Warm winter weakens demand: Temperatures across Germany and Northwestern Europe are 6°C above normal, suppressing heating loads. The result:
  • Lower power demand
  • Lower industrial consumption
  • Less coal/gas burn
• Wind surges; power prices fall: Germany’s wind generation surged to 22 GW, the highest in six weeks. Renewables captured 57% of the power mix, pushing day-ahead prices down to €90.11/MWh, the lowest since late October.
• Coal prices ease: DES ARA February cargoes traded around $93.50/t, reflecting –
  • Low liquidity ahead of Christmas
  • Weak TTF gas (hovering at EURO 26.50-27.50/MWh)
  • A well-covered utility sector
  • Thin bids and offers
  API2 forward contracts softened accordingly.
• Carbon market bullish: In contrast:
  • EU ETS carbon allowances broke above EURO 82 and EURO 84 resistance zones signalling renewed bullish interest into 2026

Europe’s winter energy landscape is now defined by a paradox: weak thermal fuels, but strong carbon.