• The loss of supply sources and high purchase costs are the major reasons for high prices and coal shortages in depots.
• These are the draft findings of the first part of the market survey conducted by UOKiK.
• At present, the operations of producers, importers and major dealers in the market are being scrutinised.

In July this year, UOKiK’s President instigated preliminary investigation aimed at analysing the situation on the coal market. In the first stage, with the support of the Trade Inspection Authority, entrepreneurs running coal depots were inspected. The inspection covered 201 operators running a total of 255 sales points. Coal depots operate primarily on a local scale. Therefore, in order to obtain possibly the most representative sample, the inspection covered entities operating in different localities situated on the territory of each province (voivodeship), whose core business activity involves the sales of solid fuels. The entrepreneurs under investigation supplied approximately 1.5 million tonnes of solid fuels to end-users in 2021, which accounted for approximately 17 per cent of household demand.

- According to the information we have obtained to date, there is no indication that restrictive agreements may have occurred between entrepreneurs who run coal depots. Higher coal prices and limited coal availability were due to external causes, which were primarily the consequence of the Russian aggression against Ukraine – Tomasz Chróstny, the President of UOKiK, says.

Causes of high prices

Rocketing prices in coal depots were mostly due to the increasing purchase costs incurred by these entrepreneurs following February 24, 2022, i.e. after Russia’s attack on Ukraine. As can be seen from the diagram below, this applies to the total volume of coal sold and purchased by the entities under investigation (“total” panel). An upward trend is also evident in the selling price of the most popular products - nut and eco-pea coal. It should be emphasised, however, that since the outbreak of the war in Ukraine, the selling prices of all grades were going up proportionally to the increase in their purchase prices by depots from suppliers or importers.

Average monthly selling prices and purchase prices of selected grades of coal at the entities under investigation (thousand PLN / t) in the period January 2021 - July 2022.

Source: responses from entities under investigation

Quite importantly, there was no significant increase in profit margin, i.e. the difference between the average purchase price of coal by depots and the average selling price from February to July 2022. For coal in total, however, it increased from approximately 20 per cent (February) to approximately 25 per cent (July).

Causes of coal shortage in depots

The increase in prices was paralleled by coal shortages in depots. Following February 24 this year, both the volume and value of their purchases have declined significantly. The underlying cause was the loss of regular supply sources. 77 per cent of the entrepreneurs under investigation confirmed that domestic suppliers or importers had refused to supply them. The main reasons for refusal included a shortage or limited quantities of coal and an embargo on products from Russia and Belarus. Furtherm