London, 30 August (Argus) — UK power sector coal consumption fell by about 15pc on the month in June because of lower power demand, according to statistics from the Department of Energy and Climate Change (Decc).

Electricity consumption of 24.02TWh in June was the lowest since August 2003, with mild weather and two public holidays contributing to the decline, particularly in the commercial sector, Decc said. But power sector coal demand was still relatively high compared with a year earlier, with consumption rising to 3.38mn t from 2.62mn t a year earlier. The UK consumed 4.13mn t in June, down from around 4.78mn t in May.

The lower coal demand left stocks higher than the previous month, with inventories at 14.36mn t at the end of June, an increase of 15pc on May levels. Stocks were the highest since January, when utilities had built up inventories before the winter months. But June levels were lower on the year by around 5.9pc because of increased coal consumption in the first half of this year.

A number of UK utilities drew down their stocks in the first half to take advantage of high profit margins, and not all plants will rebuild stocks to usual winter levels with some coal-fired power plants due to close as early as the end of this year under the EU's large combustion plant directive. UK utility Scottish Power in effect shut two units at its Cockenzie plant in June, reserving the last of its allocated operational hours for times of high demand.

Coal consumption continued to be favourable in June, accounting for around 41pc of UK power generation. Profit margins for coal-fired power plants continued to outstrip those for gas during the month, with clean dark spreads around £14/MWh ($22/MWh) higher than clean spark spreads.

Imported coal continued to outweigh domestic production despite a rise in output from UK mines. Total coal imports reached 4.15mn t in June, or 71pc of UK supply. Imports rose by 14pc on the month, and were 86pc higher than June 2011 levels.

Domestic production increased by 7.7pc to 1.69mn t of coal. Deep mines produced 714,280t, the highest in a year, mainly because UK Coal resolved technical problems at its Daw Mill mine. Surface mining production rose by 7pc on the month to 929,090t.

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