All three coal terminals in Hampton Roads saw double-digit increases in exports last year when compared to 2017, and the port exported nearly twice as many tons as two years ago.
But an end-of-the-year slowdown, coupled with worries over the global economy, has some analysts cautious heading into the new year.
Hampton Roads — the biggest coal-exporting port in North America — finished 2018 at nearly 43 million tons, what some analysts described as a “gravity-defying” 91.1-percent hike from the 22.28 tons exported two years ago. When compared to 2017, last year’s figures are a roughly 22-percent increase.
“There weren’t any sustained periods of weakness,” Jim Thompson, a Knoxville, Tenn.-based senior director of U.S. coal for IHS Markit, a global research firm, wrote in a report last week. “In fact, consistency was a hallmark, which points to the effectiveness of the supply chain.”
The news wasn’t all good, though.
Exports did not surge in last year’s fourth quarter as they did the previous two years. They instead dropped from 10.81 million tons in the third quarter to 9.94, making for what Thompson called an “anticlimactic” end to the year.
And while it’s early to predict 2019, exports could fall further in a global economy showing signs of slowing, the report said.
A recession would have “significant impact” on metallurgical coal, which is used in making steel, and accounts for a big chunk of exports heading out of Hampton Roads, Thompson said. If demand for steel goes down in the future, metallurgical coal could fall.
An economic downturn would also create obstacles for exports of thermal coal — the type used in electrical power plants. Thermal coal demand can also be impacted by something like a change in the weather. A milder winter, for example, could lower coal prices.
Hampton Roads is home to three coal-exporting facilities.
In 2018, Norfolk Southern Corp.’s Pier 6 at Lamberts Point led the way in coal volumes, exporting 17.16 million tons, up by about 16 percent from the year before.
Dominion Terminal Associates in Newport News processed nearly 15.8 million tons in the same period, a 23-percent spike compared to 2017.
Kinder Morgan’s Pier IX, also in Newport News, handled 9.62 million, a 31-percent jump over the year before.
Thompson made sure not to characterize 2018’s fourth-quarter slowdown as a weak quarter. It’s all relative, he said, because you have to look at how strong the year was when compared to the last several.
He did wonder if exports in the new year will trend slightly down due to reaching a plateau in Hampton Roads.
“Some would argue the data establishes an export ceiling,” he wrote in his report. This past year, he said, yielded a “remarkable performance.”
The question is whether it can be duplicated in 2019.
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- On January 10, 2019