Because Europe stocks coal. Bloomberg Report

European electricity producers are hoarding cargoes of coal due to a shortage of natural gas which forces public utilities to burn the dirtiest of fossil fuels.

A cargo to be delivered next month to a major European hub traded at $ 200 per tonne, the highest since 2008, according to traders who viewed the transaction on the globalCOAL platform. Several utilities entered the market this week to secure supplies before the onset of winter, traders said, who asked not to be identified because the deals are private. – Bloomberg reports.

Europe is facing an energy crisis after a long, cold winter left its gas supplies depleted. Filling them was not easy, with limited supplies from Russia and Norway forcing Europe to fight for LNG cargoes in the spot market. The low wind intensity has exacerbated the continent's energy problems, prompting public services to turn to dirtier fossil fuels to fill the deficit.

"We are seeing some rigidity in the coal market as well," said Marco Saalfrank, head of continental Europe merchant trading at Axpo Solutions AG, in an interview at the Gastech conference in Dubai this week. The profits of the coal-fired plants "have become positive, increasing production".

Energy prices are soaring just as Europe is trying to push for a more ambitious climate deal when world leaders meet in Scotland later this year. The rise in coal will likely make those talks difficult for politicians from the UK to Spain and Italy, who are already facing fear of voter backlash over rising energy bills.

The 50,000 metric ton cargo that changed hands last Friday was destined for delivery at the Amsterdam-Rotterdam-Antwerp hub, traders said. And it's not just spot prices that are rising, futures for next year's delivery have also climbed 4.1% to $ 139 a ton, the highest since 2008. Increased demand from utilities is rising. running out of stocks in European ports.

Coal supplies declined as major producers, Colombia and Indonesia, struggled with heavy rains, while some mines elsewhere closed due to the pandemic. Investments in new mining projects have almost come to a halt in recent years, with banks cutting loans to coal companies as the world tries to avoid the worst effects of climate change.

"The gas supply is low, the coal supply is low and renewables are not doing great and now we're in this crazy situation, it's the only way we can describe it," said Dale Hazelton, head of the thermal coal to Wood Mackenzie, by phone from Singapore last week.

(Extract from the press review of Eprcomunicazione)