European coal prices are climbing steadily, with Q4 deliveries to the Amsterdam-Rotterdam-Antwerp (ARA) hub estimated at $125.00 per tonne, according to Kpler’s latest monthly coal report. This figure is $20.50 higher than the most recent front-month API 2 trade of $104.50/t on Ice Futures.
The Q3 average has also edged higher, reaching $107.50/t, driven by improved profitability for coal-fired power generation in Germany and lingering concerns over low gas storage levels across the continent.
According to Montel calculations, the Q4 German clean dark spread — a key measure of profitability for coal-fired electricity — stands at €5/MWh for a plant operating at 42% efficiency. This positive margin is prompting renewed interest in coal as a viable generation source despite the broader energy transition efforts.
“The recent surge in gas prices has improved the economics of coal-fired power generation,” Kpler noted, with August margins now in the black. Nevertheless, the analytics firm cautioned that a spike in coal burning is unlikely in the short term due to strong renewable generation expected to dampen spot market coal demand.
While coal is unlikely to see runaway demand increases, the supportive fundamentals — including gas volatility and improved spreads — are underpinning stronger prices through the second half of the year.
