BAKU, Azerbaijan, April 7. The US could potentially free up some of its domestic coal supplies into the international market amid the EU ban on Russian coal to help the balance, but not in the amounts that appear to be required, Trend reports with reference to the research conducted by Rystad Energy.
“Prices are therefore set to rise even higher as buyers compete for non-Russian coal – and the situation will be magnified if other countries or companies in the Asia-Pacific region also decide to impose sanctions on Russian coal imports. Countries that continue buying Russian coal, such as China, may end up benefiting from what will likely be a heavy discount,” the company said.
Rystad Energy analysts note that the EU ban on Russian coal imports comes at a time when the international coal market is already very tight, with correspondingly high prices.
“A surge in coal demand in Asia, as countries try to minimize imports of expensive natural gas, has sent coal prices soaring in the past year. The API 2 May contract price, which is the main benchmark for coal imported into Europe, surged to $300 per tonne yesterday (up $43/tonne) as traders followed the evolving ban discussion – compared to $70/tonne a year ago. This tightness makes it quite challenging to find alternative sources of coal supply readily available in the market, and means European consumers will need to pay a premium to attract flexible sources of supply into its ports. Suppliers into the seaborne thermal coal market are already maxed out in terms of export volumes, so there is a real shortage of coal available to fill the Russian gap,” the report reads.
Rystad Energy warns that even though it seems feasible to find partial solutions to the coal crisis that is developing in Europe, the European population will have to deal with the consequences and factor in historically high electricity prices for at least the remainder of 2022.
“Power prices across the region will be set by the marginal sources of supply, which are gas and coal. Both these fuels are now trading at exceptionally high levels and will therefore have a direct impact on the power market,” reads the analysis.
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