Weak US thermal coal export recovery projected in 2021 with weak Atlantic Basin demand
In the Atlantic thermal coal export market, S&P Global Platts Analytics forecast a weak US recovery in 2021 as European import demand remains low and Russia looks to import more into Asia.
“The end-of-year rally in [Amsterdam-Rotterdam-Antwerp] prices dissipated early January, which does not bode well for a recovery in US thermal coal exports to Europe,” Platts Analytics said in its forecast Jan. 7.
Platts CIF ARA hit a 21-month high of $70.25/mt at the end of December, following a jump of nearly $20/mt since the start of November. Since the December high, CIF ARA reversed its climb, experiencing some volatility as it dropped about $8/mt in the first week, before rising slightly to $67.70/mt, down 10 cents on the week, on Jan. 8.
Prices in the Atlantic thermal coal market are expected to correct slightly downward following the strong gains last month.
Through October 2020, US thermal coal exports to Europe total 2.5 million mt, down 65% year on year, while exports to Asia are down approximately 20% over 10 months at 11.2 million mt.
In 2021, Asia is expected to be the largest regional destination for US thermal exports, importing about 12 million mt-15 million mt. European imports, however, are forecast to “rebound only slightly in 2021 to around 4.5 million mt,” Platts Analytics said.
However, Platts Analytics added, the projection has significant downside risk, similar to those for the US domestic thermal market, driven by cheaper alternate fuels and increasing coal generation retirements.
Elsewhere in the Americas, Colombian exports and production are expected to have a slow recovery, reliant on continued improving demand from the Mediterranean and Turkey markets.
Platts Analytics forecast 2020 coal exports of approximately 53 million mt with a recovery to nearly 59 million mt in 2021.
Russia, the other major coal exporter in the Atlantic market, is forecast to continue increasing its exports in 2021 to 174 million mt, up 16 million mt year on year, and to 184 million mt in 2022.
Platts Analytics “expect Russian producers will look to Asian countries to try and increase export volumes, particularly with the trade dispute between China and Australia.”