As indicated by the Polish Chamber of Commerce of Coal Sellers (PIGSW), there are millions of tons of coal lying on the heaps of domestic producers, state importers and the energy sector, but it is not heating coal. The vast majority of these reserves are fine coal, intended mainly for the heating and energy sectors, which does not meet the quality standards required for households.
Difficult forecasts for the coal market
Łukasz Horbacz, president of the board of PIGSW, draws attention to the rapid changes in the market, which make it difficult to precisely forecast the demand for this raw material in Poland. Despite large reserves of fines, fuel prices are systematically rising, because this type of coal is mainly intended for the heating and power sectors.
Before the COVID-19 pandemic, households used about 9 million tons of coal per year. Now, as many people have switched to other heating sources, demand has fallen to about 6.5 million tons. In addition, a mild winter and large purchases in previous years have meant that there are plenty of reserves in the basements. As a result, only about 5.5 million tons of fuel are expected to be needed in 2024.
Coal depots are empty
Domestic mines are struggling with financial problems, which is forcing them to limit extraction. The excess of fines means that they produce less heating coal, which is created during the extraction of fines. According to PIGSW analyses, mines supply the market with only about 3 million tons of heating coal, which is not enough to cover demand.
There are currently 25-50% fewer coal storage facilities in Poland than before 2022, and reserves are very low. This results in a deficit of around 2 million tonnes, which can only be covered by imports.
Import – solution or challenge?
One way to solve the problem of fuel shortage is import. The most important import directions are Kazakhstan and Colombiawhere better quality coal than domestic coal comes from. However, these raw materials are young and fragile, which means that 30-80% of the load is fines. Importers must therefore compensate for losses with higher fuel prices, which affects the final price and higher costs for consumers.
Additionally, Ministry of Climate plans to introduce more stringent coal quality standards. These changes could eliminate some of the raw material that does not meet the new standards, which could also lead to price increases.
Is it worth buying coal for winter now?
Taking into account the current market situation and PIGSW forecasts, purchasing heating coal before the expected price increases seems to be a reasonable solution. Global geopolitical situation and changes in global markets may have a direct impact on prices of energy resources, which makes the future of coal prices quite uncertain.
