The Coal Trader

Coal News Coal Markets, Europe

Carbon drops amid unfavorable dynamics for thermal coal

Europe’s benchmark carbon contract fell to a 10-day low on Thursday amid an overall bearish market but gained some ground again in late trading, although upside appeared limited.

The Dec 24 EUA contract last traded at EUR 57.28/t, up EUR 1.24 day on day and above its intraday low at EUR 55.02/t, the lowest since 4 March, Ice Endex data showed.

“After the upward rally of the past few trading weeks, power, gas and CO2 pared more than half of the price increases,” said Stefan Kuester of Energycharts.

The contract has lost around 12% since its four-week high at EUR 62.80/t reached on 6 March, exchange data showed. However, the market was consolidating at the current levels with no clear trend in either direction, he added.

“The market saw a short uptrend earlier in the month, [but seems to have] re-established itself in its old trading range between EUR 50-60/t, where it should remain for some time to come,” said analysts at Energi Danmark.

Unfavourable dynamics for coal
In gas trading, Europe’s benchmark TTF front-month contract was last seen up EUR 0.53 on the day at EUR 25.44/MWh, with analysts pointing to a better profitability of the fuel versus coal in the power sector.

Indeed, the profit margin of a German hard coal-fired plant with an efficiency of 42% last stood at EUR -15.28/MWh, based on year-ahead prices, while the margin for a 59% efficient gas plant stood at EUR 6.49/MWh.

“Coal to gas fuel-switching dynamics remain unfavourable for coal,” said Toby Hassall, lead coal analyst at LSEG.

The Cal 25 for coal was last seen down USD 0.88 at USD 104.50/t on Ice Futures, with Hassall pointing to a weak consumption outlook in Europe. The front month was last seen USD 0.95 higher at USD 108/t.

Reporting by: Julia Demirdag