Firm coal market supports European gas prices Chart shows over a 13% increase in Feb-21 European coal prices since the start of Q4-20
The European coal market has showed good gains since the start of winter amid a supportive fundamental environment:
- Coal stocks at the ARA terminals have entered Q1 close to 5 year lows following a strong drawdown in Q4-20
- A strong TTF (pulled up by an incredible JKM rally) has seen gas prices at multiyear highs in the coal switching price range, supporting coal generation demand
- A large rally in Pacific coal prices since the start of Q4 driven by shortages in major Asian markets has outstripped API2 strength, and sees less coal supply pointing at Europe
- Supply disruptions remain in Colombia with the continued closure of Prodeco
Stronger coal & carbon prices (34 €/t) in 2021 are set to support TTF prices via increasing coal for gas plant switching levels in the power sector. As we move into a tighter fundamental global gas environment from 2021 switching is set to return to a key role in setting European gas prices.
Source: Timera Energy
Follow on Twitter:
[tfws username=”TimeraEnergy” height=”700″ width=”350″ theme=”light” color=”#FAB81E” tweets=”2″ header=”yes” footer=”yes” borders=”yes” scrollbar=”yes” background=”yes”]
