Alexander Titov, Head of the Global Oil Market Sector at the Institute for Energy and Finance, commented to Forbes on the current dynamics of the global coal market and the prospects for Russian exports.
There are several reasons for such a significant decline in coal prices, Titov says. According to him, a fairly mild winter in Europe has reduced the demand for electricity and heat, keeping high reserves of gas in underground storage facilities and coal at port terminals.
Throughout the second half of 2022, coal-fired generation in Europe was extremely profitable due to high gas prices. Compared to the beginning of winter, prices on the TTF gas exchange decreased by 60.5% by mid-February. This dragged down electricity prices, which, in turn, reduced the profitability of coal-fired power plants. As a result, the profitability of coal and gas generation in Europe became approximately equal to each other, which has not been observed since June 2022. This has ensured a decrease in demand for coal, as utilities have more incentives to switch from coal to gas when generating electricity. Sea coal imports to Europe in January amounted to 282,000 tons per day, which is 21% lower than in December 2022, Titov notes.
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