The pressure continues on the international coal markets. In Europe, the benchmark coal contract, API 2 Cal-20, fell to a price of only 77 US dollars per ton Friday afternoon. This means that the price has fallen by more than 10 % in just one and half week, and the contract is now traded at the lowest level in almost one year.
During last autumn, the coal market peaked with the price on a ton of coal for delivery in 2019 reaching 100 dollars per ton following a long summer with heatwave in both China and Europe and several months of high demand. Since then, the sentiment has changed completely, and the market is fighting low buying interest in the beginning of 2019.
Last autumn, the Chinese government imposed import restrictions on the country’s coal power plants. These restrictions should as a starting point last until the Chinese New Year, which is celebrated in these weeks. The last signals from China do, however, indicate that the import limitations in the world’s largest country in terms of coal consumption could be prolonged. Inventory levels in the country are rising despite the import restrictions and coal burn on the country’s power plants is declining. Therefore, the market does not believe that the Chinese are about to increase their coal purchases in other countries anytime soon. This affects the price movements in Europe as well.
In Europe, coal consumption is decreasing as well, and one of the reasons is, that the cold spell, which hit the continent in January now appears to be over. According to energy news site Montel, stock levels at the four largest European coal terminals are now at 6.4 million tons, more than 2 million tons more than at this time last year. With a lack of buyers across the world, further losses on the coal market seem likely.
The European carbon emission market has made a new big price jump, and we could see the price on a CO2 quota break above 30 EUR/t in the near future.
We experienced a clear change to the Nordic weather forecasts last week, and the rest of July now looks set to be very dry. This has caused Nordic energy prices to climb, especially in the short-term forward market.