S&P Global Platts Analytics projects approximately 8 million mt of US thermal coal exports in the first quarter, steady comparable to Q1 2020, but significant risks remain by way of heightened freight prices, the weekly US Coal Market Forecast said March 11.

Elevated freight rates, for Panamax in particular, are affecting US exports to all regions, given the long distances, Platts Analytics said.

“While these higher freight rates ostensibly began with seasonal market fundamental factors, including stronger commodity demand, coal buyers have been able to absorb the higher freight rates due to a weakening US dollar against other major currencies,” Platts Analytics said in a report published March 8.

“We have concerns, however, whether buyers will be willing to continue to pay higher freight rates into [the second quarter],” the report continued.

Either freight rates will be pressured downward, or FOB prices will be pushed lower, creating more issues for producers in need of stronger coal import demand this year. Platts Analytics more strongly expects freight rates to begin falling in April onward.

In Europe, even as delivered European coal prices remained flat through February, the high freight and higher carbon allowance prices have suppressed buying interest. Additionally, the US is expected to face increased competition into Europe as Russian exports increase following a winter lull.

Even so, US exports are on pace to increase year in year during the quarter as they replenish inventories in Northern Europe that hit eight-year lows last year.

According to Platts Analytics, full-year US thermal exports are projected to be around 25 million mt, flat year on year.

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