US Non-Coking Coal: Prices diverge across grades amid European oversupply concerns

US thermal coal export prices have been moving in different directions over the past two weeks, as the higher quality grade has been edging down progressively, with no bids or offers reported for September delivery as yet.

An oversupply situation, persisting in the Amsterdam, Rotterdam and Antwerp (ARA) complex in Europe, has been the leading cause of the persistent price weakness seen in the Atlantic thermal coal markets.

Stockpiles lying at the Dutch terminals of Rotterdam, Amsterdam and Vlissingen have been measured at 6.29 million tonnes at the start of the week, which’s nearly 16 percent higher year-on-year.

Meanwhile, European coal-fired power generators have been facing downward pressure due to the ongoing global LNG glut for several months now — as slumping prices for liquefied natural gas, a cleaner energy source, has enabled power producers to prioritize gas.

Furthermore, the overall weakness in global seaborne coal markets is keeping the near-term outlook negative.

In Asia, Japanese buyers have locked in supplies with long-term contracts, Chinese utilities are buying more local coal and generating more power from gas and water, and South Korea has raised taxes on coal imports. In Europe, too, sluggish industrial output had been curtailing power consumption, while LNG output has soared.

As global demand for the commodity softens, coalminers exporting out of the US are struggling to compete with mining giants from the traditional originating countries, viz. Australia, Indonesia and South Africa; chiefly because of logistical challenges to ship their coal to key emerging markets in Asia.

PRICE ASSESSMENTS

N.B.:
1. All prices are in USD/MT
2. Weekly price is derived by averaging daily prices of every official business day; between and including Monday through Friday

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