Atlantic basin thermal coal exports will continue to be challenged this year as western Europe moves away from coal-fired generation and imports.
Industry executives speaking at the Coaltrans USA conference in Miami, Florida, last week painted a picture of shifting demand, ample supply and price disparities that seaborne market participants as a whole are grappling with.
The coal industry “is undergoing quite a transformation,” as geopolitical tensions and shifting market share to Asia shape trading, Ernie Thrasher, chief executive of coal marketer XCoal Energy and Resources said at the conference. That is resulting in a “distinct group of winners and a distinct group of losers.”
Middle Eastern and Asian countries such as Turkey, China, India and Vietnam are taking a greater share of seaborne thermal coal trading. That will continue as generators in those countries build power plants to meet growing electricity needs and former large consumers in Europe retire plants, executives said.
The IEA projected last month that global coal trading will inch up by less than 1pc a year through 2024 as growing demand in southeast Asia offsets a 5pc/yr drop in EU purchases. IEA also expects US demand to shrink by 4pc/yr through 2024.
Thrasher is hopeful the recent interim trade agreement signed by the US and China will support coal exports. The agreement goes into effect on 15 February and calls for China to more than double its energy purchases from the US this year from 2017 levels.
The countries so far have not elaborated on how China might reach the purchase target it has pledged to make.
But US coal producers, particularly steam coal producers, must struggle to compete in Asian markets, given freight rates on long hauls from the US to China, Korea and India and plentiful supply from Australia and Russia.
US producers also are limited in responding to any increase in Turkish coal demand since government regulations cap the sulfur content of electric power generators’ coal imports at around 1pc.
Colombian coal is likely in a better position in Turkey, where it has been the dominant import source, said Howard Gatiss, chief executive of CMC, which markets coal for the Cerrejon mine in Colombia. He said the new Russian port on the Black Sea, called Taman, opens up some options for Turkish buyers, but those potential opportunities may be short-term in nature.
Gatiss did not give other projections on Colombian coal exports.
US exports likely will continue to decline, at least in the short term, executives at the conference said. None put a numeric figure on their expectations, but Michael Beyer — chief executive of Canadian producer Vista Energy Resources and a former chief executive of Illinois basin producer Foresight Energy — predicted that more coal intended for the export market will come back in to domestic markets, “which is basically going to be too much coal.”
“The next 12 months are going to be very challenging,” Beyer said. “There has to be rationalization in production capacity in the US market, and until you see that it is going to be very difficult to see recovering prices.”
View Article here.
- On January 29, 2020