While U.S. coal consumption has generally declined since its 2008 peak, the Energy Information Administration projects U.S. coal exports reached 116 million short tons (Mmst) in 2018 — the highest level in five years — based on foreign trade data collected by the U.S. Census Bureau.
Exports of coal from the U.S. have increased since 2016, as international prices have made it more economic for U.S. producers to sell coal overseas, Kallanish Energy understands.
U.S. exported 15% of its coal
In 2018, the U.S. exported 15% of its coal, with the remaining 85% sold to end-use markets, primarily the power sector and industrial customers.
Coal exports have increased during the past two years, driven by increasing international coal demand which in 2018 accounted for the largest share of total U.S. coal disposition on record.
The U.S. exported 54 Mmst of steam coal and 62 Mmst of metallurgical coal last year, based on export data collected by the Census Bureau.
Strong international demand raises prices
Strong international demand has led to export prices increasing in recent years; coal export prices have increased in each of the past two years to average $59 per ton for steam coal, and $138 per ton for metallurgical coal in 2018.
Metallurgical, or met, coal, which is used in the steel-making process, has greater value than steam coal, which is used to create heat for industrial processes, commercial use, and power generation.
Asian countries want met coal
Asian countries account for roughly 75% of metallurgical coal trade in the world, and increased demand in China and India in 2017 and 2018 has helped push met coal prices up throughout Asia.
U.S. steam coal exports to Asia have also increased during the past two years, from 5 Mmst in 2016, to 20 Mmst last year, or nearly 40% of total U.S. steam coal exports, EIA found.
India, Japan, and South Korea were the primary Asian destinations for U.S. steam coal. U.S. steam coal exports have also increased to some new markets such as Egypt, Thailand, and Ukraine in recent years, providing some potential for market growth.
EIA price data show the foreign coal trade appears to drive the market for U.S. met coal. The volume of metallurgical exports has grown to triple the level of domestic coke producer demand for metallurgical coal.
Steam coal export prices also respond to international price movement, but they have a more limited impact on domestic coal prices because steam coal exports account for less than 10% of steam coal demand.
This post appeared first on Kallanish Energy News.