Germany's Coal Imports Expected to Fall

Germany's coal imports are likely to fall to 53 million tonnes in 2015 from a record high last year of 56.2 million, lobby group VDKi said on Thursday, citing lower demand from power stations and steelmakers.

Coal is still the backbone of power generation in Europe's biggest economy, which is moving away from nuclear and fossil power to renewable energy.

It uses hard coal for 18 percent of electricity generation, mostly imported by VDKi's 73 member firms, while a quarter comes from domestic brown coal.

"We expect stagnant or falling imports of steam coal (for power plants) over the full year," VDKi chairman Wolfgang Cieslik told a news conference.

On steel manufacturers, who buy coking coal via VDKi, he said he was expecting "declining production over the full year, although there were much more optimistic signs early in the year."

Two thirds of coal imports go to power utilities, just under a third to the steel sector and the remainder to heating providers.

The pessimistic outlook came despite a positive start to the year when energy consumption rose by nearly 5 percent, due to a more severe winter than a year ago, Cieslik said.

But coal-to-power plants, which struggle increasingly against competition from renewables, could not produce at full stretch because high volumes of weather-driven wind and solar power were given priority access to power networks, he said.

Coal-fired power generation in the first four months lagged that in comparable 2014 by 2.4 percent.

Cieslik also said that steelmakers had reported 1.5 percent lower crude steel production and 2.9 percent lower pig iron output in the first six months of the year.

Germany's record coal imports last year were due to healthy demand for steel and closures of domestic coal mines.

Coal importers have noted with rising concern that their utility customers such as RWE and E.ON are becoming increasingly unprofitable because of weaker prices for power in wholesale markets.

Over a quarter of power already comes from energy that is subsidised at fixed tariffs. Their grid priority eats into the run times of thermal power stations, threatening their economic viability.

"We need rules that guarantee hard coal plants their long-term survival, but politicians do not appear to want to listen and respond," Cieslik said.

(Reporting by Vera Eckert)