Atlantic thermal coal pauses after rally as fundamentals take centre stage

• DES ARA spot at $110.50/t, up $2 - July bid at $113/t supports, but June lags
  
  
• ARA inventories down 30% y-o-y - HES terminals at 2.5mt, 41% below April average
  
  
• Russian hydro generation up 6.6% y-o-y in Q1 - thermal generation stable
  
  

Atlantic thermal coal prices took a breather on 30 April after a sharp two-day rally, as geopolitical noise gave way to fundamental assessment. The DES ARA spot physical assessment rose $2 to $110.50/t, supported by a July bid at $113/t, though June prices remained much lower.

The June DES ARA financial contract - a proxy for Q2 2026 prices - edged down 25 cents to $114.25/t, while Cal 27 finished $2.25 lower at $121.50/t. The forward curve flattened noticeably, with the contango between May and June standing at $5 on financial contracts but wider at $7 on physical coal. Discounts on DES ARA narrowed sharply from the $10 levels seen in recent weeks to just 25 cents for July and $2.25 for June.

A trader active in the European market noted: "The geopolitical situation fueled the rally earlier this week, but the market was due for a pause and some consolidation after the huge gains."

ARA inventories fall sharply year-on-year

Coal inventories at Europe's ARA terminals stood at 2.7 million tonnes on 27 April, up 2.2% week-on-week but down 29.8% year-on-year, according to latest data. Stocks at HES terminals fell to 2.5 million tonnes, down 1.6% week-on-week and 25.7% year-on-year. Current inventory levels are 1.7 million tonnes or 41% below the average April inventory since 2021, which stands at 4.2 million tonnes.

The sharp year-on-year decline in ARA stocks suggests that despite muted immediate demand, the supply-demand balance is tighter than recent price action might indicate. Any pick-up in European coal burn could quickly translate into price support.

Gas and power markets provide mixed signals

The TTF June contract recovered 0.9% to 46.50/MWh on 30 April, while the June LNG contract to Northwest Europe gained 7.4% to $15.70/MMBtu. EU gas storage is recovering seasonally, currently at 32.2% of capacity, still well below the 39.2% recorded at the same time last year.

Norwegian gas flows to Europe dropped to 288 million cubic metres per day on 30 April, down from 307.6 mcm/day on 29 April, adding a modest supply-side concern.

The German power June contract edged down 1% to 84.70/MWh, while the EU CO2 contract increased 1% to 73.80/t. Brent crude oil fell 6.2% to $114.20/bbl.

Russian power generation rises 1.5% in Q1 2026

Russian electricity generation fell to 106 TWh in March, down 0.9% month-on-month and 1% year-on-year, according to Rosstat data. However, total generation for the first quarter of 2026 reached 332 TWh, up 1.5% year-on-year.

Thermal generation fell to 73.2 TWh in March, down 2% month-on-month and 1% year-on-year, but remained stable for the quarter at 229 TWh. Nuclear generation fell 7% month-on-month and year-on-year to 16.3 TWh in March, though quarterly nuclear output increased 4.4% year-on-year to 54.4 TWh.

Hydro generation was the standout performer, rising 10.3% month-on-month and 6.6% year-on-year to 16 TWh in March. Quarterly hydro output increased 5.3% year-on-year to 47.3 TWh.

The strong hydro performance in Russia may reduce pressure on thermal generation in the near term, though the impact on seaborne coal markets is limited given Russia's role as an exporter rather than a major importer.

US coal usage forecast to decline in Q2 2026

US power generation coal usage is forecast at 26.6 million tonnes per month in Q2 2026, representing a 2% year-on-year decline. February data showed coal usage dropped 22% month-on-month and 11% year-on-year to 28.2 million tonnes.

Between January and February, a general shift from thermal to renewable sources occurred within the US power mix. Coal lost 2 percentage points to 16%, while gas was marginally up at 39%. Renewables gained over 2 percentage points to 19%.

US gas-fired generation is also forecast to fall 2% year-on-year in Q2 2026, to 135 TWh per month. February gas generation dropped 13% month-on-month but remained marginally up year-on-year at 132.1 TWh, slightly above expectations.

Indonesian supply remains constrained

Indonesian daily thermal coal exports averaged 1.1 million tonnes per day over the past five days, down 15% week-on-week and well below the 2025 average of 1.31 million tonnes per day.

Spot FOB Kalimantan 4,200 GAR was assessed at $64/t, up from previous levels. Spot FOB NEWC 5,500 was assessed $3 higher at $100/t on the back of a spot deal at that level.

LNG exports from the Persian Gulf remain at zero according to vessel tracking, while the spot LNG contract delivered to Northeast Asia eased slightly to $16.90/MMBtu.

Outlook

The Atlantic thermal coal market is transitioning from a geopolitical-driven rally to a fundamentals-based assessment. ARA inventories are significantly below year-ago levels, providing underlying support. However, the decline in US coal usage forecasts and stable Russian thermal generation suggest limited upside in the immediate term.

The flattening of the forward curve and narrowing of discounts indicate that the market is consolidating after recent sharp moves. Traders will now focus on actual demand signals from European utilities and the pace of inventory drawdowns.

Reporting methodology: Gas and power data from European energy exchanges, trade flow data from Commodities at Sea, Russian generation data from Rosstat, US generation data from EIA.