Mediterranean offers great opportunity for US coal – Xcoal
Growing coal demand in the Mediterranean and Middle East offers opportunities for US coal exporters, particularly as competing origins increase shipments to Asia, a spokesman for US exporter Xcoal said.
“Asian demand is significant and will be significant going forward but it’s challenging for the US to participate in this market,” said Nicholas Cron, head of portfolio optimisation at Xcoal.
“But Asian growth will pull more coal from Colombia and South Africa out of the Atlantic basin, which leaves a sort of vacuum, in which the US can participate,” he said, at a Coaltrans conference in Cairo.
US thermal coal exports last year soared by 30% to nearly 50m tonnes, with shipments to Egypt almost tripling to around 3m tonnes, according to some estimates.
The country currently favours US high-sulphur thermal coal for use in cement production, with such material making up the bulk of all coal imports.
“We’ve done some indirect supplies to Egypt and are working on direct supplies,” said Cron, adding Turkey would also be a “very good market” for US exporters.
But high-sulphur coal had limited markets, he added.
Others questioned the longer term prospects for US coal in the region, due to concerns about high-sulphur coal usage.
“High-sulphur coal is cheaper but it can cause damage to [cement] kilns in the longer term,” said Simon Goslar, managing director at trading firm Mercuria, also speaking at the conference.
South African coal would therefore be preferable, if prices were at similar levels, he added.
“[US high-sulphur coal] is cheaper in the short term but it’s not clear what the longer term cost of damage to plants will be,” he said.
But the managing director of Egyptian energy firm Petrotrade, Afifi Afifi, said the issue was not so much of a concern, provided plants had “the right maintenance management”.
US coal shipped to Egypt has a typical sulphur content of 2.6-4.2%, compared with 0.3-1% for Russian coal and 0.5-0.7% for South African material, according to data provided by Egyptian quality inspection service Incolab.