T/A coal arb for U.S Coal, a coal-to-gas switch made in Europe

transatlantic arbitrage coal 2

EIA forecasts average delivered coal prices the electric power industry will be $2.35/MMBtu in 2014. Coal delivered to German utilities along the Rhin can fetch $4/MMBTU while gas is often priced above $12/MMBTU.

 In Europe, gas prices and Russia woes increase appetite for pulling the coal-to-gas switch. Prices are incentivizing unused coal capacity to come on and back out natural gas demand.

Meanwhile, investments in coal supply and coal power generation face high investment risk because of the climate policy uncertainty so coal mines have turned to coal traders with the aim of securing the financing and marketing of their coal.

The Trade, Shipping and Finance Wizard

Navigating the commodities markets with Freight and Spreads

 

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