The EC has ruled out the purchase of Russian gas even in case of power cuts in the EU. According to Ursula von der Leyen at the end of the European summit of EU heads of state, this will not happen even if there is an energy crisis in Europe.
European energy companies and traders are preparing to increase purchases of thermal coal, as the conflict in the Middle East increases volatility in gas markets and revitalizes the economic feasibility of switching from gas to coal ahead of summer demand, writes ProFinance.
So far, there is no active talk in the market that the current situation will repeat the scenario of 2022, when the conflict between Russia and Ukraine forced a massive switch to coal-fired power plants amid an acute supply crisis.
Since then, Europe has diversified its gas supplies, increased the use of renewables and decommissioned or reduced coal-fired capacity. Nevertheless, the latest conflict has brought renewed attention to thermal coal as a hedge against gas instability.
Europe’s imports of thermal coal fall to 37.4 million metric tons in 2025 from 81.7 million metric tons in 2022, reflecting a structural weakening in coal demand due to the idling or closure of coal-fired power plants.
However, power companies now see a greater likelihood of increased coal burning in the summer than in recent years, driven by renewed gas price volatility and lower gas inventory levels.
Forecasts
First, there will be an increase in supply in the Northwest European spot market. The effects could persist until the third or fourth quarter of 2026 if conflict and disruptions to LNG supply persist.
“We expect the transition from gas to coal in the EU-15 to outpace Asian thermal markets as an initial response. Given Asia’s higher reliance on thermal coal, we believe there could be a shift in regional thermal coal demand and higher spot prices if the disruption is prolonged,” said Wendy Shallom, associate director of global thermal coal shipping analysis at S&P Global Energy CERA.
“It is now cheaper to operate coal-fired power plants than gas-fired plants, [although] coal-fired plants will not operate in base load mode, but it looks like they can operate at higher capacity than gas-fired plants if needed,” S&P Global quoted a trader in Switzerland as saying.
The second quarter is typically characterized by low coal consumption, which could lead to lower inventories at utilities – including at the Amsterdam-Rotterdam-Antwerp hub – just when price signals are starting to favor coal.
Coal demand will increase
Market participants expect spot purchases by utilities and traders to increase in the coming weeks as they rebuild inventories ahead of a potentially more active coal-burning season.
“Coal demand in Northwest Europe is likely to increase as short-term marginal costs for hard coal are now lower than gas,” a Singapore-based trader said.
The CIF ARA 6000 kcal/kg NAR thermal coal price as measured by Platts reached $131.8/tonne on March 3. That’s the highest level since October 2023. The price has since fallen to $124/tonne.
“Energy companies may return to the market as uncertainty over the duration of gas supply constraints and support for thermal coal spot prices raise concerns in the short term,” according to analysts at S&P Global Energy CERA.
Even if Europe does not fully utilize its coal fleet over the summer, additional coal-fired power generation could still be enough to increase consumption and attract additional shipping volumes to maintain adequate fuel supplies.
