Coal news and updates

Through the first half of the year, coal exports through Hampton Roads, the top U.S. coal-shipping port, are down about 12 percent from where they were at this time last year.

 

While 2013 turned out to be the port’s best coal-exporting year since 1992, experts aren’t anticipating a turnaround in the next six months.

 

“I think the rest of the year you’re going to see definitely a downtrend,” said David Host, chairman and CEO of T. Parker Host, a Norfolk-based shipping agent.

 

He attributes much of the falloff in coal exports from Hampton Roads and other U.S. ports to two global developments – a surge in Australian coal production and a weakening of the Chinese economy. China’s imports of metallurgical coal, used in steelmaking, are projected to drop by more than 20 percent from last year.

 

The world coal market is split between metallurgical or “met” coal, and steam or “thermal” coal, which is used in electrical power plants.

 

Through the first five months of this year, met coal exports through the port ran about 64 percent higher than thermal-coal exports, much of it handled at Norfolk Southern Corp.’s Lamberts Point facility in Norfolk, according to T. Parker Host data.

 

The region’s two other big coal-export complexes – Kinder Morgan’s Pier IX and Dominion Terminal Associates, both in Newport News – rely more on thermal coal. Together, they moved about four times as much thermal coal as Norfolk Southern’s facility.

 

Five years ago, industry analysts were projecting a growing demand for met coal – in particular, in China.

 

Host, however, said “the great China story,” in which that country’s fast-growing economy would continue to boost world demand, hasn’t quite panned out.

 

An Old Dominion University study released last fall calculated the impact of coal shipments through Hampton Roads. It estimated that in 2011, the year studied, the more than 42 million tons moved through port terminals generated roughly $900 million in goods and services and nearly 4,200 jobs locally. That included indirect effects.

 

Coal exports continued climbing for the next two years and in 2013 reached nearly 50 million tons – their highest level for the port since 1992.

 

Volume this year, however, has been off. And Host said, “All roads lead to it being a tough second half of the year.”

 

Jim Thompson, director of North American coal for a unit of IHS, a Colorado-based global information company, said it’s important to keep things in perspective.

 

U.S. coal exports are “still very respectable when you look at recent history,” he said. “It’s not like the bottom has fallen out of the export market. What you’ve done is you’ve trimmed away at it.”

 

Thompson agreed with Host about the impact of Australia, which is “cranking out coal at record levels.”

 

That’s added to a glut of coal worldwide that has driven down prices, he said.

 

Central Appalachian coal, much of which moves through Hampton Roads, is regarded as among the highest-quality coal available, but it’s also more expensive to mine and, because of that, “has trouble being competitive in the world market,” Thompson said.

 

He, too, predicted more erosion in U.S. exports this year and wondered whether a dramatic drop could be just around the corner.

 

“I think that all logic tells you that will happen in the second half of this year,” he said. “But U.S. exporters have proven to be extremely resilient, and the railroads have stepped up and been willing to adjust rates to help in this regard.”

 

A trade publication late last month reported that Norfolk Southern and CSX Corp., the two big East Coast railroads, are offering coal producers rebates of up to $5 a ton to transport met coal to the terminals in Hampton Roads and Baltimore.

 

 

Source: http://hamptonroads.com/