Heaps of unsold coal lying around Polish mines, warehouses full of imported raw materials, as well as falling demand and the announcement of record mining by Indonesia may not be good news for domestic producers. But what do they mean for Polish energy consumers and owners of coal-fired boilers to heat their homes? This situation may prove beneficial for them, especially in the face of the planned unfreezing of prices at the beginning of July.
- Sławomir Wołyniec, president of the management board of V-Project and the beneficial owner of Grupa Altum, EC Będzin SA and EC Będzin Wytwarzanie, comments on how high coal supply may affect the costs of the Polish energy sector and individual customers.
- Prices of eco-pea coal in supermarkets have also dropped, by about PLN 140. A tonne of eco-pea coal costs from PLN 1,650 to PLN 1,750 – emphasizes the expert JAkiEkogroszek.pl – The cheapest product in our list is Jupiter from Atex, offered at PLN 1,199 per tonne.
- We expect a downward trend in the sales prices of coal and eco-pea coal. This is due to falling demand and coal remaining in warehouses. The prices of coal and eco-pea coal should fall further in the coming months.
The recent discussion on energy prices, which were frozen two years ago, shows that their marketization may be a problem for many consumers.
This is confirmed by the actions of the government, which is working intensively to ensure that the new prices are at a level acceptable to the majority of society. One of the ideas proposed by the Ministry of Climate and Environment is an energy voucher for people who will be most affected by the planned change.
At the end of March this year. the ministry also announced the commencement of work on a special act on energy poverty, which is intended to alleviate the negative effects of unfreezing energy prices. Decisions of this type, although justified, are still a form of artificial regulation of prices, meanwhile they can set themselves at a low level, on purely market principles.
There is plenty of coal for heating. Prices should drop in the coming months!
Although many factors influence the final cost of energy on the free market, one of the most important is undoubtedly the price of the raw material from which energy is produced.
In Poland, the raw material has been coal for years, from which the vast majority of energy in our country is produced. According to data from Polskie Sieci Elektroenergetyczne, in February 2024, the largest share in electricity production was held by professional power plants based on hard coal (43.26%) and lignite (19.77%), emphasizes Sławomir Wołyniec, president of the management board of V -Project.
Even though the production of energy from coal is gradually decreasing, especially in favor of that produced from renewable sources, it still remains the dominant raw material, the price of which together with the costs of CO emission allowances2 have the greatest impact on the amount of end recipients’ bills.
Meanwhile, reports from the market show that we currently have more than enough coal.
In its summary of 2023, the Instrat Foundation reports that coal sales decreased by over 12% last year. as a result, its reserves in the country increased by 5.17 million tons (to 13.11 million tons) during the year.
Today, the dumps at mines and power plants are filled to the brim with coal, and the warehouses of imported raw materials are equally filled with coal. This, in turn, according to data presented by the director of the Katowice branch of the Development Agency, amounted to almost 17 million tons last year.
The supply of imported coal may increase further due to the record mining amount announced by the Indonesian government in 2024, amounting to over 922 million tonnes.
The above factors resulting in a surplus of raw material on the Polish market also include the falling demand for coal, which is related to, among others, with growing energy generation from renewable energy sources.
All this means that coal prices should gradually fall, and energy prices should fall along with them. Already in November last year, the president of the Polish Mining Group announced that coal prices for the energy sector would drop from over PLN 34 per GJ to PLN 20-23 per GJ (gigajoule), i.e. by approximately 40%. This may, in turn, translate into lower costs for end users. Especially since positive signals are also coming from the stock exchange – emphasizes Sławomir Wołyniec, president of the management board of V-Project.
The price of electricity will be regulated by the market in 2024
After the unfreezing of energy prices at the beginning of July, can we expect an increase in energy costs? This cannot be ruled out.
However, this should not be a drastic jump, and the increased prices will be rather temporary. Their final level will be determined by market factors. We can already see that prices will tend to fall.
In BASE Y futures contracts for 2025, the price of 1 kWh of energy is similar to the currently frozen price. Higher electricity bills may be a problem in the second half of this year, but we can expect a significant reduction from next year. This may also be influenced by falling coal prices, although this will probably not happen immediately.
Current quotations show that the price of coal on international markets is still falling, which may be good news for individual customers for whom prices depend on imports and the situation in the world. However, improvement is also visible in the case of domestic coal, on which domestic producers of electricity and heat base their costs, emphasizes Sławomir Wołyniec, president of the management board of V-Project.
According to analyzes of the Industrial Development Agency and the Polish Power Exchange, in January this year. steam coal prices dropped by 18.2%. mdm (to the level of PLN 505.96 per tonne), and for the heat market by 12.7%. In February, steam coal recorded a decline of 4.1%. mdm, although the price for the heat market increased slightly – by 0.1%.
However, it should be remembered that prices for power plants are set on the basis of long-term contracts with domestic mines, which means that in this case we will have to wait a while for lower energy costs resulting from lower coal prices – emphasizes Sławomir Wołyniec, president of the management board of V-Project.
However, the visible oversupply of domestic raw materials, the high availability of imported raw materials and the falling demand for coal allow us to hope that over time this will translate into lower energy prices for the end customer.
Another promotion at PGG and a slight increase in prices at PKW (former TAURON Wydobycie)
The “Spring Discounts 2024” promotion started on April 8, 2024 in the PGG online store.
The sooner customers of the PGG e-store decide to purchase coal, the greater the discount they will receive – emphasize PGG experts.
There is a discount code on the home page – www.sklep.pgg.pl – thanks to which customers will pay less for each ton when purchasing at least 2 tons of coal, regardless of the type. Over the next 2 months, this will be a reduction of as much as PLN 200/t.
The campaign will last from April 8 to July 31, 2024 and allows you to buy coal cheaper with a discount code. It’s worth hurrying.
By using the discount code PGG202404 when purchasing in April and May, coal will be PLN 200/t cheaper. In the following months – June and July – further discount codes will be generated, but it is worth buying now, in spring, and the sooner, the greater the discount:
- in April and May (08/04/2024 – 31/05/2024) – PLN 200/t when purchasing at least 2 tons,
- in June (01/06/2024 – 30/06/2024) – PLN 150/t when purchasing at least 2 tons,
- in July (July 1, 2024 – July 31, 2024) – PLN 100/t when purchasing at least 2 tons.
As we can see, PGG is trying to put financial pressure on its customers to buy coal faster in the PGG e-store.
The end of the heating season is getting closer. Let’s check the prices of eco-pea coal at the beginning of April. As you can see, most products are marked in green, which means that their prices have decreased compared to March. The exception is Tauron, where we have an increase of PLN 26 for Jaret Plus eco-pea coal and PLN 32 for Sobieski eco-pea coal. After conversion, coal from Tauron costs over PLN 1,500 per ton including delivery – emphasizes the JakiEkogroszek.pl expert
Południowy Koncern Węglowy (Former Tauron Wydobycie) slightly raised; prices for eco-pea coal. For Sobieski eco-pea coal we will pay PLN 1,362.51/t (excluding excise duty and transport costs). We can also buy Jaret Plus eco-pea coal for PLN 1,306.25 (excluding excise duty and transport costs).
However, in general, the prices of eco-pea coal are falling on the market.
Prices of eco-pea coal in supermarkets have also dropped, by approximately PLN 140. A tonne of eco-pea coal costs from PLN 1,650 to PLN 1,750 – emphasizes the expert JAkiEkogroszek.pl – The cheapest product in our list is Jupiter from Atex, offered at PLN 1,199 per tonne. For people interested in eco-pea coal with a higher calorific value, the best choice will be Ekosun, with a price of PLN 1,399 per tonne. In both cases, the cost of courier delivery is already included in the price.
Is it worth buying coal in April or should I wait?
We expect a downward trend in the sales prices of coal and eco-pea coal. This is due to falling demand and coal remaining in warehouses. The prices of coal and eco-pea coal should fall further in the coming months.
