AlwaysFree: EU May Coal Imports Edged Up from April Low

In May, the European coal imports edged up from the thirty-year low in April but still sharply fell.

Eurostat data showed that the 27 EU members’ net imported coal went down by 3 mt year-on-year to 3.3 mt, up from the 2.6 mt in April. The fall in May was for the 15th straight month.

In the January-May period, net imports to the regions sans the UK slumped by 20.9 mt on a yearly basis to 18.6 mt. The UK bought about 1.2 mt, down from 2.6 mt. 

EU imports for Russian origin coals dropped by 9.3 mt year-on-year to 13.1 mt while the US, Colombian and Indonesian supplies down by 1.5 mt, 2.2 mt, and 2.4 mt, respectively. The biggest reading affecting the numbers was the Netherlands imports which fell by 7.3 mt or 35% of the fall, followed by Spain by 3.9 mt and Germany by 2.8 mt.

In April, the month-ahead average clean dark spreads for 46%-efficient plants slumped to as low as minus EUR6.47/MWh (USD7.4/MWh) and have stayed negative ever since. 

Compared with early 2020, the annual supply decrease might be slowed as generation margins for coal-fired plants are gradually becoming profitable on the curve out to March 2021, supported b the sharp contango in German power prices.

Meanwhile, the Amsterdam-Rotterdam-Antwerp (ARA) region’s stocks have been going down by about 1 mt, compared to July 2019’s high of 7 mt due to weaker imports this year. Therefore, low prices are deterring Russian, Colombian, and US suppliers from exporting to the region.

Looking ahead, for the remainder of 2020, coal consumption in the region is likely to be unseasonably low despite the major recoveries in power demand or gas prices.

The EU’s largest economy, Germany, is estimated to go down on coal imports on a yearly basis this year. Importers’ association VDKI estimated the country’s imports to slump by 16-30% year-on-year in 2020 as the recent EU energy prices signaled that the coal-to-gas fuel switching is predicted to be a limiting factor for coal demand in the medium term.

For September onwards, base-load margins are positive. The first-quarter of 2021 clean dark spread was EUR6.36/MWh (USD7.27/MWh) and might lead to a moderate increase in the third quarter’s coal burn. Other than that, some utilities are seen to have to step up restocking for the peak winter months.

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