Polish coal supply tightens as imports fall

Weak Polish thermal coal imports early in 2021 could tighten availability of fine grades, which until recently were oversupplied in the country.

Quicker gains in Asia-Pacific coal prices compared with the Atlantic have weighed on Russian exports to Poland in recent weeks. Argus assessed NAR 6,000 kcal/kg Australian coal at a $21.10/t premium to Europe on 22 January, which was up from $11/t in December and represented an 18-month high.

Extremely cold weather in Siberia has also hit rail loadings for Europe and curbed supply to Poland, importers said. A rail terminal operator in Braniewo on the Russia-Poland border told Argus that winter imports had been unusually low, but that it was too soon to say if the trend was temporary or will continue.

Lower imports, combined with a recovery in industrial and power-sector demand and a cold snap in early January, has already pressured traders' fine coal stocks. Importers sought to minimise imports of coal fines throughout 2020 as weak prices made sized grades more profitable for stock and sale.

Braniewo coal fines stocks — unmoved for most of 2020 — have visibly shrunk in recent weeks, a source told Argus, while another importer said they now had no fines in stock.

Some importers have still suspended imports of coal fines as they wait to see how sustainable the latest price rally is, since competition among suppliers of coal fines in Poland is fierce. One importer said they were "lucky" to buy 5,500 kcal/kg 0-50mm Russian coal for February-delivery for $63.50 DAP border price, when offers ranged at $68-75/t.

On 26 January, an importer offered 6,000 kcal/kg coal at Gdansk for $77.50/t on the Argus Open Markets platform. A Russian supplier also offered 5,500 kcal/kg coal in Braneiwo at $80/t, but neither offer resulted in a deal.

Any shift from oversupply to shortage is still expected to be gradual, as thermal coal demand is in structural decline in Poland, with consumption falling by around 10 pc/yr, traders said. There is an estimated 20mn t of thermal coal in stock across the country, but around 17mn t of this is at coal mines, power plants and CHPs. Stocks at coal mines are also believed to be mainly lower grades, for which demand is weaker.

The shortage of more desirable coal grades is evident in the minimal exports from the country last year. Polish exporter Weglokoks' international sales fell by 58pc on the year to 260,000t in 2020, shipped almost exclusively by rail.

In January-November 2020 Poland imported just over 10mn t of thermal coal, a 16pc decline on the year according to figures from the country's ARP, which collects import data for the government.

This was the second annual decline from the record 16mn t imported in 2018. Russia remained by far the largest source of Polish imports, with nearly 8.5mn t received in January-November, down by 15pc on the year. Colombia and Kazakhstan followed, with nearly 900,000t and more than 800,000t respectively, ARP said.

Poland's seaborne imports fell by about 20pc on the year to a little more than 4mn t in 2020, according to estimates and data compiled by Argus from ports. Inland rail imports of Russian coal were 6.6 mn t, according to Russian rail data. Braniewo handled around 2.9mn t in 2020, which was stable on the year, according to terminal operators. The Brest-Malasheviche border crossing with Belarus was the second-biggest entry point for Russian coal to Poland.

By Tomasz Stepien

Seaborne imports by port mn t