German 2015 Power Falls to Six-Month Low as Coal Drops to Record

German next-year electricity, a European benchmark, slumped to the lowest level since April as coal for 2015 delivery in the region declined to a record.

German power slid for a third day, dropping as much as 1 percent, according to broker data compiled by Bloomberg. The equivalent coal contract fell 0.6 percent to the lowest since it started trading in January 2010, the data showed. November power prices in France and Germany dropped to record lows as mild weather damped demand.

“Weakening demand in Asia and Europe has pulled down coal prices,” Energi Danmark said in a report on its website. German power “is falling on the bearish fuel complex and the mild winter weather in central Europe.”

Germany produced about 45 percent of its electricity from hard coal and lignite last year, according to AG Energiebilanzen e.V., which compiles energy statistics. European next-year coal prices slid 18 percent in 2014 due to a glut of supply and slowing demand growth in China, the world’s biggest consumer of the commodity.

German 2015 power lost 0.9 percent to 33.95 euros ($43.07) a megawatt-hour, the lowest since April 10, at 5:23 p.m. Berlin time, broker data showed. The equivalent coal contract fell for a fourth day, dropping as low as $72 a metric ton, according to the data.

Import Tariffs

An oversupply of coal in Europe may worsen after China said Oct. 9 it will reintroduce import tariffs to support money-losing domestic miners. The Asian nation’s government moved last month to ban imports of lower-quality coal and asked power utilities to reduce buying of foreign supplies.

Nearer-term power contracts dropped today as mild weather curbs the need for home heating. German temperatures will be as much as 7 degrees Celsius (12.6 Fahrenheit) above normal for the time of year at the start of next week, before dropping to as much as 3 degrees above the norm later in the week, Byron Drew, lead forecaster at MetraWeather, said in an e-mailed report.

“Deep low pressure continues to develop west of the continent through the middle of this week, generating a much warmer southwesterly air flow into western Europe but also reinforcing the unsettled and windy circulation across many areas,” Drew said.

German November power slid as much as 2.1 percent to 35.15 euros a megawatt-hour, according to broker data. The equivalent French contract slumped as much as 4.2 percent to 49.80 euros.

Temperatures in France are forecast to exceed the 10-year average by 6.4 degrees this weekend, according to Bloomberg’s weather model. Electricite de France SA started three of its French nuclear reactors, adding to available supply.

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