Europe: Thermal coal prices remain lower y-o-y as demand slows, supplies stay high

• Weak demand from mild winter, competitive gas
  
  
• Inventories remain high on ample global supply
  
  

The European thermal coal market has turned noticeably weaker in recent times. Benchmark coal prices at the Amsterdam-Rotterdam-Antwerp (ARA) hub now trade between $105-110/tonne (t). That is a clear drop from early 2024, when prices were closer to $130/t. A year ago, prices briefly touched $140/t amid supply worries. The current trend is firmly downward.

Why are prices falling?

Several straightforward reasons explain the slump.

1. Mild winter lowers heating demand: Most of Europe experienced a warmer-than-normal winter. Homes and offices needed less heating. Coal-fired power plants ran at reduced rates. As a result, stockpiles at Dutch and German ports remain high. With plenty of coal already on hand, utilities are not rushing to buy new cargoes.

2. Cheaper natural gas and more renewables: Natural gas prices have stayed relatively low, partly due to strong storage levels and steady liquefied natural gas (LNG) imports. Gas-fired power is now cheaper than coal in many European countries. At the same time, wind and solar generation have expanded rapidly. On windy or sunny days, renewables often meet most of the electricity demand, further squeezing coal out of the mix.

3. Sluggish industrial activity: Factories and heavy industries -- such as steelmakers, cement plants, and chemical producers -- have slowed production. High energy costs and weaker economic growth in Germany, Poland, and elsewhere have cut industrial output. Since these sectors are major coal users, their slowdown directly reduces demand.

4. Ample inventories and steady imports: After the 2022 energy crisis, Europe worked hard to replace Russian coal. Imports from Colombia, South Africa, and the United States surged. By early 2025, port stocks and power plant reserves were comfortable. Even with lower imports recently, inventories remain above the five-year average. No one is panic-buying.

What about supply?

Global coal supply is healthy. South Africa's Richards Bay terminal is shipping steadily. Colombia has recovered from earlier rail disruptions. US exporters continue sending coal to both Europe and Asia. Russia, though banned from European ports, still sells heavily to China, India, and Turkiye, keeping global prices in check. No major mine strikes or logistics failures have occurred.

A note on policy

European Union carbon prices have also played a role. The cost of emitting CO has hovered around EUR 65-70/t, which is significant but not high enough to completely discourage coal use. However, when combined with cheap gas, the carbon price adds extra pressure on coal plants to stay offline.

Outlook

Traders expect prices to remain weak in the near term. If mild weather continues and gas stays cheap, coal could dip below $100/t. Some analysts predict a trading range of $90-110/t through spring 2026.

That said, risks remain. A sudden cold snap, a gas supply disruption, or a spike in Asian demand could quickly lift coal prices. But for now, the European thermal coal market is quiet, well-supplied, and cheaper than it has been in two years.

Price summary:

Current ARA spot price: $105-110/t

Early 2024: ~ $130/t

One-year peak: ~ $140/t

Possible near-term low: below $100/t