The fall will be a serious test. Who will feel the lack of carbon the most?

Coal prices remain high and raw material supply is not keeping up with demand. The Russian coal embargo will have an additional impact on the coal market situation. – Autumn will be a test in this regard, and we could have a significant social problem due to the lack of coal on the market and its high prices – says Marian Kostempski, former president of Kopex, in an interview with the WNP portal. pl.

  • Coal sellers say cutting coal from Russia raises fundamental issues for the rest of this year.
  • Namely, there is a shortage of about 11 million tons of coal, including a shortage of coal for the municipal sector and housing in sufficient quantity.
  • And at the same time, the potential for huge increases in coal prices.

Recently, the Chamber of Commerce of Polish Coal Sellers, together with the Association of the Federation of Licensed Sellers of the Polish Mining Group, sent a letter to Prime Minister Mateusz Morawiecki, which indicated a number of threats posed by the embargo on coal imports from Russia.

“This law, although morally correct, has very profound consequences that could affect millions of Poles far more painfully than the Putin regime, against which it is directly directed”, indicate the coal sellers.

They recall that the EU decarbonization policy, which has been developing for many years, has led to a gradual reduction in coal production in the country. Coal supply declined much faster than demand and the resulting gap was 80% filled by imported coal. just from Russia. There are many reasons for importers to focus on this direction, the main ones being the low price, relatively low logistics costs and quality adapted to the needs of the Polish market.

Read more on the subject: There will be a shortage of heating coal in Poland. Calculations detailed in the letter to the Prime Minister

You must already act

Charcoal sellers point out that cutting this coal overnight, even if fair, poses fundamental problems for the rest of the year: a shortage of around 11 million tonnes of coal, including a lack of sufficient quantity of coal for the municipal sector and housing; the potential for huge increases in coal prices.

– Autumn will be a test in this regard, and we could have a significant social problem due to the lack of coal on the market and its high prices – says Marian Kostempski, former president of Kopex, in an interview with the WNP portal. pl. – So far, we do not see any action from the government, nor any thoughtful policy in terms of securing coal for the next heating season. Maybe Bogdanka will have a little more to mine, and Tauron Wydobycie too, but to increase his production, it takes time. Maybe next year there will be more coal from domestic mines, but problems could arise as early as this fall. The part of the company that heats the houses with coal may have problems with the availability of the raw material. That is why actions to secure the raw material in sufficient quantities are needed now – emphasizes Marian Kostempski.

And coal prices remain high. As for thermal coal, its ton in the ARA ports (Antwerp-Rotterdam-Amsterdam) costs around 275 USD.

According to the sellers, the missing quantities of coal can be estimated by analogy with the previous year. We entered 2021 with gigantic reserves of 5 million tons in the energy and mining industries, during the year 10 million tons were imported into the country, and to balance the market at the end of the year , about 2 million tons were missing . This gives a total demand of 17 million tons compared to the annual national production.

In turn, in 2022, the industry entered virtually stockless. As for external coal, about 2 million tons were imported from the beginning of the year to April 15. After the introduction of the embargo on coal from Russia, significant quantities of coal from Kazakhstan could enter by rail, but the market already expects the Russians to block the transit of coal in from Kazakhstan in May in retaliation for the embargo. So there are ports.

The maximum capacity of the ports is 8 million tons of coal per year, but a quarter has already been sold, which represents only 6 million tons. “Realistically, given the competition for waterways with other commodities, we believe that around 4 million tonnes of throughput can be assumed by the end of the year. Together this gives a supply exceeding the annual national production at the level of 6 million tons. With unchanged demand, this translates into an irreparable shortage of 11 million tons”, indicate the coal sellers.

Increasing production takes time and money

This shortage will be distributed more or less in the following proportions: 6 million tons will be missing in the energy sector, 5 million tons will be missing in the municipal and housing sector. While these 6 million represent only about 20%. energy consumption, in the municipal and housing sector, 5 million tons is a considerable 40 percent. the whole market.

Sellers indicate that the shortage will be felt like never before.

“We believe that with such an extreme advantage of demand over supply, prices, which are already hovering around 2,200 gross per tonne at ports, can easily exceed the 3,000 gross level during the heating season. At the same time, we appreciate the sense of mission of domestic producers, who are still trying to keep prices significantly lower than imports, but the supply of domestic coal in the municipal housing sector is so grossly low that it has no major impact on average market prices” – coal sellers said in letters to the Prime Minister.

Our largest coal company, namely Polska Grupa Górnicza, assumed coal extraction in 2022 at a level slightly above 23 million tons. It will probably be about a million tonnes higher.

– Our plan assumed just over 23 million tons – said Tomasz Rogala, Chairman of the Board of Directors of Polska Grupa Górnicza, speaking of production plans for 2022. – We would like to add a million to that. This will be our all-time high for this year with a reduced number of assets and walls that will be used for this production. As for the following years, it is possible at the level of 1.5 million tons, and maybe a little more – added Tomasz Rogala.

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