Europe seizes coal from abroad to fill the void left by Russia

Cooling towers release steam at the Jaenschwalde lignite coal power plant, operated by EP Power Europe AS, in Peitz, Germany. (Krisztian Bocsi/Bloomberg)

The hunt for European coal consumers to replace Russian shipments with shipments from around the world has boosted imports to a key hub by more than a third, helping to fill badly depleted stocks.

Coal poured into the Antwerp-Rotterdam-Amsterdam region – a huge hub for transporting energy and raw materials – in the first half of this year, with imports up 35% to 26.9 million tonnes compared to the same period last year, according to Kpler.

That helped ARA’s coal stocks double to nearly 6.6 million tonnes from a more than five-year low in the first quarter. Inventories are now close to record levels seen in 2019, according to Kpler. On the other hand, the flood of imports contributes to significant port congestion.

Shipments are soaring as the region scrambles to replace purchases after Moscow invaded Ukraine, said Matthew Boyle, principal analyst for dry bulk, gas and LNG at Kpler Insight. More coal from the United States, Colombia and Australia – countries that tend to produce higher quality or high calorific value materials that release more heat and energy when burned – helps close the gap.

Competition for a fuel many want to make history is heating up as power producers across Asia and Europe seek to secure additional shipments amid an energy crisis. Germany and Austria are reviving idle coal plants in response to Russian gas supply restrictions, while Japan and South Korea are stockpiling fuel ahead of warmer summer temperatures.

A worsening global fuel shortage drove prices higher, with European benchmark one-year coal futures hitting a record high in June.

Australian exporters, including Sydney-based Whitehaven Coal Ltd., have received supply requests from European countries, including Poland, and the company previously offered 70,000 tonnes of coal under a government aid sent to Ukraine.

High price differentials between European and Australian prices have allowed traders to send cargo from the Asia-Pacific region, even after taking into account the high shipping costs for the longer journey. Low-quality Indonesian coal also made its way to Europe, though Kpler said it was likely mixed with American material with a higher calorific value.

The massive influx of coal cargoes is exacerbating traffic congestion at ports.

“We are seeing very high congestion for major European ports,” said Abhinav Gupta, dry bulk shipping analyst at Braemar. As of June 29, 71 dry bulk vessels were waiting at anchor in the area off Antwerp, Rotterdam and Amsterdam, triple the five-year average of 24 vessels for this time of year.

The current waiting time for coal ships is around 10 days, according to Kpler, who said low river levels on the Rhine have also contributed to the delays. He expects that to improve to around eight days by mid-July.

Coal terminals are currently at full storage capacity and transporting large volumes of fuel inland “has become a challenge in recent weeks”, the Port of Rotterdam said. The situation has been complicated by a shortage of barges, he added, as many vessels are tied to Ukraine’s iron ore and grain exports.

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