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Colder weather to strengthen EU coal demand

A change in the weather in Europe, along with a renewed decline in the short-term supply of coal in both Atlantic and Pacific basins, could help boost coal prices, according to a recent research note from Marex Spectron.

European weather systems have been dominated by significantly higher temperatures than average through November, weakening seasonal demand for electricity. These high temperatures, combined with a very high amount of renewable energy hitting the grid, has weakened demand for coal.

But the weather is changing. According to Georgi Slavov, Head of Research at Marex Spectron, “the anti-cyclonic conditions that dominated over southern and central Europe for the first half of the month will be replaced by low pr essure valued and cold air intrusions from northern latitudes. The effect will be wetter and colder weather conditions, more in line with the end of the autumn season.”

The more favourable weather conditions will be combined with a tightening of coal supply in both basis, continued Slavov.

“May even more important […] for the current bullish price formation is the renewed decline of short-term supply of coal in both Atlantic and Pacific basins,” Slavov said. “The implications for the price can be significant since we are entering a period of stronger demand with low inventory levels.”

source: http://www.worldcoal.com