March 13, 2018 Read More →

Trump Tariffs Stands to Undermine U.S. Coal Export Hopes

S&P Global Market Intelligence:

New steel and aluminum tariffs may benefit U.S. coal producers’ domestic sales, but the move also threatens a recent improvement in overseas demand for metallurgical coal.

Ramaco Resources Executive Chairman and Director Randall Atkins warned that “the law of unintended consequences will be alive and well” as it is with most government interventions in markets.

“The question would also be how much of a shortfall would occur on exported coal to foreign steel groups forced to cut back production headed to the U.S.,” Atkins told S&P Global Market Intelligence. “That is a wild card given that in many cases they are also supplying steel to a strengthening home market in Europe, etc.”

According to the U.S. Energy Information Administration, U.S. coke plants consumed about 18.8 million tons of coal in 2017. U.S. producers shipped about 55.3 million tons of metallurgical coal abroad.

“I worry about countermeasures; I worry about if the Europeans are having a difficult time exporting steel, then their demand for U.S. coal could actually decline,” said Andy Blumenfeld, head of market analytics for Doyle Trading Consultants and a former Arch executive. “This, of course, could have probably a bigger impact on U.S. metallurgical coal than any pickup on the domestic side.”

More ($): ‘Unintended consequences’: Tariffs may boost US coal use but threaten exports

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