But shortages are expected to appear on this market as well.
In Germany, a closed thermal power plant in Lower Saxony has been given emergency permission to operate until April, as debates over the ability of Europe’s largest economy to cope with the disruption of Russian gas supplies are growing. lit, The Guardian reports.
The decision was described by German Economy Minister Robert Habeck as a necessary evil, acknowledging that the move represents a significant step backwards in the country’s efforts to combat the climate crisis.
Meanwhile, Poland announced that 11 ships loaded with coal are heading to its territory, Warsaw Voice notes.
“Poland is safe, it will have coal in the autumn and winter season”, announced the CEO of PGE, Wojciech Dabrowski. “Right now 11 coal ships are heading our way.” PGE is the largest electricity producer in Poland.
The coal will be imported from various directions, mainly from South America. PGE Paliwa and Weglokoks were ordered by the Polish Prime Minister to buy and import 4.5 million tons of coal for households in Poland by October 31.
And yet, the supply of coal is limited. This is because no one is building new capacities, and the markets will remain under pressure due to the weather and the coronavirus, explains Peter O’Connor, analyst at Shaw & Partners, for CNBC.
The main problem is that the EU will soon be deprived of its biggest supplier: the bloc imposed sanctions against Russian coal in April, banning new imports starting August 10, according to Politico.
That means the 2 million tonnes of coal it will receive from Russia this month will be its last delivery, says Argus Media analyst Alex Thackrah.
To these are added serious logistical problems.
Indonesia, South Africa and Colombia are potential suppliers, but EU countries are likely to face “extremely high prices” because of the type of coal used across the bloc, according to Thackrah. Coal prices at the API2 hub in Rotterdam reached $380 a tonne last week, already more than four times higher than in the same period in 2021.
The EU will also face stiff competition from players such as India and South Korea, which have existing coal supply agreements with many of these countries, according to Braemar analyst Mark Nugent.
The crisis will probably be felt most intensely by Poland and Germany.
A deficit in Germany would be particularly painful for the steel and chemical industries. Energy production would also be affected, but to a lesser extent. In Poland, meanwhile, the government is embroiled in a political scandal over its failure to increase the country’s coal reserves.