Weather phenomena threatens coal markets once again

Once again, the weather phenomena La Niña threatens coal production in the Pacific area. This is however not enough to cause rising prices on the European coal markets.

The European coal markets receive mixed signals at the moment. The price on a ton of coal has moved more or less sideways during the last month, and there are different factors that will decide what way, the market will move during the coming time.

One of the factors, that are very decisive right now is the French nuclear sector. During the last weeks, the situation has improved a lot, as the country’s nuclear safety inspectors have allowed the operators to restart several of the reactors, that previously have been shut down due to safety concerns. There are however still insecurity about some reactors’ availability during the winter, and since the relationship between the French nuclear operators and safety authorities is not good, the market continues to keep an eye on the situation in the country. A well-functioning French nuclear sector during the winter will limit demand for coal.

Now, weather conditions have also started to influence the coal markets. Weather forecasts indicate, that a new condition of the weather phenomena La Niña could be under way in the Pacific area. La Niña usually causes heavy rainfall in the Southern parts of the Pacific area, and this has earlier affected the coal production in important coal countries such as Australia, Colombia and Indonesia. The risk of a rough La Niña has led to rising prices in Asia, but due to the aforementioned improved situation in the French nuclear sector, it has not been able to push prices in Europe upwards anything noticeably.

At Energi Danmark, we continue to follow the development during the coming time. Should the La Niña phenomena turn out to be very powerful, it could cause big production and supply issues, which especially could hit the Chinese market, which is already impacted by high demand.