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European coal prices have hit a 13-year high as coal supply to Europe remains constrained and utilities fire up more coal power plants amid surging natural gas prices.
The price of coal for delivery next year to the Amsterdam-Rotterdam-Antwerp (ARA) hub has risen by 2.6 percent to $137 per metric ton, Bloomberg reports. The prices are at their highest since 2008 as more coal is added to Europe’s electricity output these days amid record-high gas prices, and as supply and stockpiles are scrambling to meet demand.
“Stock levels across Europe are low, and as on the gas market, coal supply from Russia has fallen lately,” trading group Energi Danmark says, as carried by Bloomberg.
According to an Argus analysis from earlier this week, stocks of coal at the major hubs globally—including at the ARA hub—fell by half during the first six months of this year due to rising demand and a slow supply response.
The sky-high gas prices in Europe are forcing more utilities to turn to coal ahead of the winter heating season.
Earlier this week, UK power company Drax said it could have its last two coal-fired plants in the country operating beyond the 2022 deadline it had set for closure if the UK government asks it to keep them operational amid the energy crisis in the country and the whole of Europe.
“If the government wants us to rethink our plans, we need to talk to them in the next few months,” Drax’s chief executive Will Gardiner told the Financial Times on Wednesday.
The rally in natural gas prices is also spurring on global demand for coal. China and India look to replenish low stocks of coal, driving coal prices in Asia to records.
Goldman Sachs last week nearly doubled its price projection for coal prices in Asia, expecting the benchmark Newcastle thermal coal to average $190 a ton in the fourth quarter, up from a previous forecast of $100 per ton, due to sky-high gas prices ahead of the winter heating season.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.