US coal exports may surge 60% in 2018 – analyst
US seaborne thermal coal exports could surge 60% this year amid a shortfall in global supply and healthy import demand, the director of consultancy Perret Associates told Montel.
Guillaume Perret estimated the country’s coal exports could rise from 36.7m tonnes in 2017 to 58m tonnes this year and 60m tonnes in 2019.
Citing a “structural shortage” of supply and a sharp year-on-year rise in seaborne coal prices, he also said the US’s high-sulphur coal has some advantages over supplies from competing origins.
“New power plants are being built with desulphurisation systems, so the [US coal’s] high sulphur is not such an issue,” Perret said. “And many countries are looking to raise their caps on permitted sulphur content [in power generation] as they can see US coal is very competitive.”
Global import demand – for seaborne thermal coal, lignite, and some anthracite grades – could grow by nearly 5% on the year to 995m tonnes in 2018, while supply will rise 4% to just 976m tonnes, according to Perret Associate estimates.
The Global Coal Newcastle index has averaged USD 104/t in the first half of the year, up from USD 81/t in January-June last year.
Although the US used to export primarily to northwest Europe, it will likely take advantage of growing Asian and Mediterranean demand amid declining north European demand, Perret said.
“Also, the mines and logistics infrastructure are already there, so you don’t need a big investment to export more from the US,” he said, adding this was not the case for other producers, such as Australia and Russia.
US exports to India, for example, already reached 6.2m tonnes in the first half of 2018, compared with exports of 6.8m tonnes for all of 2017, he said.
Meanwhile, he said domestic coal demand in the US “will be flat at best, or erode slightly” over the coming years.
And demand from Europe is also on the wane, with the EU-15 countries expected to import just 90.2m tonnes of seaborne thermal coal this year versus 107m tonnes last year.