Coal prices up on output cuts, supply disruptions, increased demand
FRANKFURT, June 20 (Reuters) – European power curve prices rose sharply on Monday, driven by price gains in the related coal market, with the German benchmark position for year-ahead delivery reaching a new 2016 high.
“We’re seeing power prices aligned with coal,” one trader said. “That is the most important factor.”
Imported hard coal in Europe, accounting for 18 percent of generation in Germany in 2015, cost $57 a tonne for the 2017 position, 3.3 percent more than last Friday.
Global coal pushed back above $50 last week, driven by output cuts, supply disruptions and increased demand.
German baseload power for 2017 rose 60 cents over last Friday to 27.95 euros ($31.69) a megawatt hour (MWh), 5 cents above the 2016 high reached on June 7.
The equivalent French contract, which is less liquid was up 65 cents at 33.5 euros/MWh.
Crude oil prices, an important signal in the energy markets, extended gains due to a weaker dollar and easing worries over Britain’s possible exit from the European Union.
Front-year EU carbon emissions allowances, which interact with coal and power because producers must hold them to cover their output, were up 2.5 percent at 5.81 euros a tonne.
Spot electricity prices were lifted by higher demand and lower solar and wind power supply, while higher availability of coal-burning capacity dampened the price increase, traders said.
The price of German baseload power for Tuesday delivery rose by 3.75 euros to 33 euros/MWh from the price paid for Monday.
The same French contract was at par with its German equivalent, which was up from a bid-ask price of 29.75/30.50 euros/MWh quoted last Friday for Monday delivery.
In central Europe, the Czech year-ahead position rose 45 cents to 28.54 euros/MWh, while the spot price for Tuesday gained 4.15 euros to 37 euros/MWh. ($1 = 0.8819 euros)
(Reporting by Vera Eckert; Editing by Louise Heavens)