Low CIF ARA prices are expected to continue pulling US thermal coal exports lower over the second half of the year and into next year, with total 2019 exports expected to be down nearly 10 million mt year on year at 39 million mt, according to a report by S&P Global Platts Analytics.
“We believe that exports over September-December should come in lower [year on year] as exporters curtail shipments due to low ARA prices rather than logistical challenges,” Platts Analytics said in a report.
For 2020, Platts Analytics forecasts a further 8 million mt drop in thermal coal exports to 32 million mt.
“We believe that the risks to our CY20 estimate are to the downside, as CAPP and NAPP coals remain uncompetitive with the costs of other coal supply to Europe and ILB deliveries face increased competition from Russian and Colombian coals,” the report said.
According to Platts Analytics, thermal coal prices hit a floor in Europe and Asia in July and August “as prices fell to near marginal production costs,” adding that the recent recovery in September was a correction upwards.
“There have been some corresponding supply cutbacks in the Atlantic Basin,” including from the US, Colombia, Russia and South Africa, it added.
Southeast Asia continues to be a “bright spot” for seaborne import demand, the report said. Coal-fired power generation and imports in August “surged” year over year, and this is expected to continue into the fourth quarter.
South Korean imports rose to a seven-month high in August, up 15% from the year-ago month to 12.6 million mt. While US and Colombian exports to the country increased, along with Australian and Canadian supply, South African volumes dropped 46% year on year to about 300,000 mt.
US exports to South Korea in August totaled 635,625 mt, up 68.2% from the month before and up 60.9% from the year-ago month.
“We believe that coal generation in August fell [year on year], so the rise in August imports appears to be opportunistic buying,” the report said. Overall in 2019, South Korean imports are expected to be down 5 million mt compared with 2018.
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- On October 3, 2019