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US coal exports fall 7% year-on-year in Q4’20; China is one of the main importers




Coal shipments from the United States to some of the country’s top importers increased significantly in the fourth quarter of 2020, with China posting a triple-digit increase amid its growing trade dispute with Australia.

Total US coal exports in the three-month period fell 7.3% year-on-year to 17.4 million tonnes from 18.8 Mt, according to S&P analysis Global Market Intelligence. Compared to the previous quarter, the United States shipped 25.1% more of the merchandise from October to December 2020.

Despite the year-over-year slowdown, the quarterly export figure “slightly” exceeded Moody’s forecast for the period, reflecting some recovery in coal prices in the second half of 2020, said Benjamin Nelson, analyst at Moody’s Investors Service, at Market Intelligence.

“Demand for thermal and metallurgical coal has been hit hard by declining demand for electricity and steel, respectively, after the coronavirus spread around the world,” the rating agency wrote in a note to October 2020. “Most coal companies still have a negative outlook in response to cash consumption, weakened liquidity, and significant uncertainties surrounding the prospect of a slight recovery in domestic and international coal prices in 2021.”

Six of the top 10 U.S. coal terminals by volume saw a significant year-over-year slowdown in shipments in the last quarter of 2020 and five posted declines of 15% or more.

The Los Angeles and Detroit coal terminals saw the largest year-over-year declines in ocean shipments in the fourth quarter of 2020. The Los Angeles terminals shipped 135,000 tonnes of coal, down 64. 1% over the previous year, while the Detroit terminals recorded a 37.9% drop in shipments to 90,000 tonnes.

Shipments from the New Orleans and Seattle terminals were down 35.6% and 32.7%, respectively, year over year, while coal shipments from the Norfolk, Va., Terminals, fell 15.1% to 6.0 Mt.

Meanwhile, terminals in Mobile, Alabama, saw the largest increase in coal shipments with 2.8 Mt in the fourth quarter of 2020, 32.5% more year-over-year.

While more than half of the top 20 US coal destinations received fewer deliveries in the last quarter of 2020 compared to the period a year earlier, destinations such as China, India, the Dominican Republic and the UK received higher deliveries of the product.

India, the most popular destination for U.S. coal, imported 3.6 Mt in the December 2020 quarter, up 55.0% year-over-year and 68.7% from quarter to quarter.

Consol Energy Inc. chairman, chief executive officer and director James Brock said rising petroleum coke prices led to increased shipments to the South Asian country.

“We continue to see strong petroleum coke prices resulting from reduced oil production, which is supporting demand and prices. [Northern Appalachia] charcoal and high [calorific value] markets, particularly India, ”Brock said in a Feb. 9 earnings call.

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China recorded the largest increase in US coal exports for the three-month period, outsourcing 1.0 Mt of coal. This figure represents an increase of 251.8% year over year and 748.2% quarter over quarter. The surge in US deliveries to the Asian country came amid the Australian coal import ban and other diplomatic tensions.

Chinese utilities and steel mills received verbal notice from customs at the start of the fourth quarter of 2020 to stop importing thermal and coking coal from Australia. This prompted the utilities Huaneng Power International Inc. and Huadian Power International Corporation Ltd. to cancel three Australian high ash thermal coal ships in October 2020.

While the Chinese directive closed the door to Australian coal miners, it presented opportunities for other major producers, including the United States.

“The increase in exports to China reflects trade issues and higher prices in China, which has created an opportunity for US producers to ship to China,” Nelson said.

The ban has triggered an increase in China’s import volumes from other origins in different grades of metallurgical coal, according to Jeffery Lu, senior editor of the metallurgical coal and coke segment of S&P Global Platts.

“Most of the market players are examining the status quo of such a diversified supply structure, at least until China lifts its import ban,” Lu said in early February.

Meanwhile, Ral Foley, senior vice president of marketing and logistics at diversified Canadian miner Teck Resources Ltd., said the ban had weighed on demand for maritime coking coal in 2020.

“In China, following the ban, we saw a sharp increase in imports of coking coal by sea in 2020 to reach the second highest level on record at 49 million tonnes,” Foley said during of a call for results on February 18. “This compares to 60 million tonnes in 2013, which was the highest level, and it was an increase of 8 million tonnes year on year.”

Foley noted that it’s unclear exactly when the import ban will end. “In the meantime, what we are seeing and enjoying is the price premium for sales in China.”

The US Energy Information Agency recently projected a 23% increase in US coal exports in 2021 as various economies emerge from the pandemic and restart operations. The agency expects exports to increase another 12% in 2022 as market conditions “continue to normalize after the pandemic”, while total shipments are still expected to be lower than in 2019.

S&P Global Platts and S&P Global Market Intelligence are owned by S&P Global Inc.

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