US coal producers can look to the Middle East for future export opportunities as domestic and western European demand continues to fall, speakers said at the 48th annual Eastern Fuel Buyers conference in Orlando, Florida, today.
The United Arab Emirates, Egypt, and Turkey are markets US coal producers can target, particularly if sulfur restrictions are raised, said Peter Bradley, chief executive of Javelin Global Commodities.
“There are some new builds in the UAE, with first deliveries in the next year,” Bradley said. “There is a big power station be built along the Suez Canal. It will be I think 6,000MW, so it is significant.”
Middle Eastern ports are size constrained, making them a good fit for US shippers, Bradley said.
Another potential outlet for US coal is Turkey, which imports 30mn-35mn metric tonnes of thermal coal a year, mostly from Colombia.
“Turkey has a maximum of 1pc sulfur import restriction,” Bradley said. “All of the power stations in Turkey are fully scrubbed, some with very good dry scrubbers. They can burn potentially 10mn to 12mn t of imported high sulfur coal. I am spending time with the government and generators trying to educate them.”
Political tensions between the US and Turkey could make breaking into that market difficult, Bradley said. Market participants had expected early last year that the government would issue rules lifting the sulfur restrictions, but the US’ imposition of tariffs on Turkish steel imports seemed to disrupt progress.
Another country to watch is Morocco, which is considering moving its sulfur restrictions up to 2.5pc-3pc.
“That would open up a lot of coal,” Bradley said.
Oman, Pakistan, Bangladesh and the Philippines are also growing markets the US could target, said Seth Schwartz, senior fellow for energy and environmental policy at consulting group Energy Ventures Analysis.
“US coal exports are in demand around the world,” Schwartz said. “World thermal coal demand is growing, not shrinking.”
More investment in US export terminals is needed to take advantage of these opportunities, Bradley said. US coal would be more competitive if ports were dredged deeper, and there was greater stockpile capacity at the ports, he said.
“We need to ship the big vessels out, not the small vessels, if we want to compete in Asia,” Bradley said.
Cement kilns in India also could be an opportunity for US coal producers, Schwartz said, particularly for high heat content Pittsburgh seam coal.
India remains a tricky market because of capital constraints, Bradley said. Lenders are reluctant to fund projects aimed solely at exports to the country because of India’s preference for short-term spot deals.
“It is such a capital constrained industry there,” Bradley said. “We need to work on providing more funding into the system to get those exports out.”
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- On May 9, 2019