US Non-Coking Coal: Demand wanes amid dreary outlook for winter

Fob prices for US exports of thermal coal (loaded at major ports on the East Coast) have fallen slightly over the previous week, as the short-term market outlook and sentiment has remained negative.

The outlook for US thermal coal prices continues to remain bearish heading into winter amid skepticism over whether the European winter season would fetch additional demand to exhaust the extensive inventories in the Amsterdam-Rotterdam-Antwerp (ARA) storage complex.

Traditionally however, as winter approaches, coal supplies from the US into Europe witness considerable growth.

Nevertheless, European-delivered coal prices have been facing intensifying downside pressure for most of the year, due to oversupply of Russian coal, coupled with competitive natural gas prices and a glut of LNG supply.

Meanwhile, shallow water levels on Europe’s Rhine river are hampering barge movements and effectively disrupting supply chains in the industrial heartland of the continent.

Last week’s water-level at Kaub — a critical chokepoint on the Rhine, near Frankfurt in Germany — dropped to about 100 centimeters, half the depth needed for fully loading barges.

Notably, the Rhine is one of the longest European rivers, which spans for 800 miles across central western Europe, from its sources in the Swiss Alps and flows through Switzerland, Germany, France and the Netherlands before emptying into its delta estuary on the North Sea at the bustling Rotterdam port.

This mighty waterway is an important navigational route for inland transportation of industrial raw materials and goods including coal shipments.

The Rhine’s low-water situation has badly affected freight supplies in the region and this has, in turn, impacted coal deliveries to power plants.

As a consequence, coal stocks at key northwest European import terminals have risen to multi-month highs.

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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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