Reuters: European coal prices need $80 rise for gas to become competitive

A steady decline in European coal prices that has coincided with a tight gas market means that coal prices would have to rise by almost $80 per tonne in order to restore competitiveness to gas for power generation, Deutsche Bank said on Tuesday.

Healthy coal export levels from producers such as Colombia, South Africa and the United States have led to an oversupplied coal market and helped pull prices down.

"In terms of comparative value to a power generator, natural gas is currently trading at a level which is so expensive relative to coal that coal prices would have to rise to $163 per tonne in Europe and $169 per tonne in the UK in order to restore competitiveness to natural gas for baseload power generation," Deutsche Bank said in a research note.  MORE