European thermal coal imports will only rise marginally this month from March’s multi-year low, according to provisional vessel-tracking data from Kpler, as generators focus on depleting existing stocks amid tepid demand.
European countries – excluding Turkey and Russia – were likely to import 1.36m tonnes of the fuel this month, compared with 1.17m tonnes in March, the data showed on Wednesday. This would be the second lowest volume since Kpler’s data history began in 2017.
Of the total, the Netherlands would bring in 35%, or 0.47m tonnes, followed by Croatia and Poland with just over 0.2m tonnes each and Germany with 0.1m tonnes.
Unusually, Indonesia would be the region’s largest supplier this month, providing 0.31m tonnes, followed by Colombia – Europe’s biggest supplier in 2023 – with 0.28m tonnes.
The Indonesian coal would be shipped primarily to Croatia (0.24m tonnes), with the remainder earmarked for Romania, the data showed.
“Imports are drying up and stocks have started to come down, [albeit] slowly,” said a coal analyst with Swiss trading house.
Coal inventories at northwestern European import terminals fell this week to five-month lows of 5.29m tonnes, Montel reported on Monday.
But further stock erosion would “take time” due to low coal-fired generation demand, the analyst said.
Low profit margins
The European Commission wants the EU bloc to slash fossil fuels like coal in the energy mix to help meet a regional net zero-emissions target.
The current low demand for coal in power generation is reflected by flagging profit margins.
The May German clean dark spread – the profit margin for burning coal to produce power – remained poor, with Montel calculations showing negative levels of nearly EUR -26/MWh for plants with an average efficiency of 42%.
The equivalent margin for competing gas-fired units stood at around EUR -6.30/MWh,
“Now it’s a matter of time to see the [coal] stocks come down and fresh demand start to appear,” the analyst added.
In light of the muted demand, the API 2 front month was last seen down USD 0.15 on the day at USD 111.75/t on Ice Futures, after earlier reaching a one-month low of USD 111.70/t.
By Laurence Walker
