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U.S. coal exports down sharply in second quarter compared to 2018

August 15, 2019

S&P Global Market Intelligence ($):

U.S. coal exports were roughly flat in the second quarter compared to shipments made in the prior period but remained down 18.1% compared to the second quarter of 2018.

About 23.2 million tonnes of coal were shipped from U.S. ports in the second quarter of 2019, nearly flat compared to 23.1 million tonnes of coal shipments in the prior quarter and down significantly from 28.3 million tons of coal exports in the second quarter of 2018. Exports heading to India, the sector’s largest customer, were down 24.6% year over year and 16.9% quarter to quarter.

The U.S. Energy Information Administration recently projected annual coal exports would sink by about 15.6 million tons to 100 million tons this year. Exports are expected to fall further to 90.4 million tons in 2020.

European steelmakers have struggled in recent months, leading to lower demand for U.S. metallurgical coal, Seaport Global Securities LLC noted in an Aug. 13 analyst note. Ports in the Netherlands, a typical point of entry for shipments heading to customers throughout Europe, took about 6.7% less coal from ships originating in the U.S.

Foresight Energy LP President and CEO Robert Moore said the netbacks on export tons are falling compared to the levels seen before and the company is evaluating options to move coal back into domestic markets. “We are shipping coal everywhere that we can find a home for it. I mean, we’re moving coal into South America. We’re moving coal into Asia. We’re still moving coal into Europe,” Moore said. “If these export markets aren’t there, then we’re poised to take domestic share. And that’s what we’re going to do.”

The president and CEO of another Illinois Basin producer, Alliance Resource Partners LP, said Alliance was prepared to capture domestic business from higher-cost producers by either selling at a lower price or working out a deal to sell its coal to its peers to fulfill contracts of higher coal producers if export markets do not improve. “I’m not counting on the domestic market mix changing and I’m not counting on the domestic market growing,” said Joe Craft. “I’m just saying, we can absorb. If there’s no export market or the export market stays flat, there are opportunities for us to sell coal domestically that would be more attractive than selling into the current price curve for [the European coal price benchmark] API2.”

More ($): U.S. coal export volume sank 18.1% in Q2’19 compared to year-ago


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