US Non-Coking Coal Prices Decline on Weak European Demand amid Oversupply

US thermal coal export prices began the week with marginally decreased rates from last week, as the European market is still viewed as oversupplied, even with spot trades concluded in the delivered-Europe export market.

Nevertheless, Atlantic thermal coal markets are expected to witness short-term bullish sentiment in the coming weeks with improved spot activity and the likelihood of increased coal burn in Europe, as the recent heat wave could help draw stockpiles lower.

Massive Increase in Asian Demand Countering Shortfall in European Imports

Although European coal imports are declining, thermal coal pricing in the Atlantic basin has been very strong over the last 18 months to two years, despite the drop in European imports.

As demand continues to grow globally, US coal exports is increasing to meet the growth in demand from Asia and the Middle East.

About one quarter of US coal cargoes last year headed to Asia – especially to India, but also to Japan, South Korea, Indonesia, and Thailand.

US coal exports rose to a five-year-high of 105.92 million metric tonnes (MnT) in 2018, from 89.04 MnT in 2017, as per the vessel lineup data compiled by CoalMint Research.

US Government Policies against Coal-Fired Power Generation

With increasing investment in renewable energy, the United States continues to steadily phase-out its aging coal-fired power plants. In 2018, the US retired 12.9 GW of coal-fired capacity. According to some industry projections, further 6 GW of coal-fired capacity will be retired in 2019, and 5 GW in 2020.

With domestic demand in decline, US coal producers are becoming increasingly reliant on the export market.

PRICE ASSESSMENTS

N.B.: All prices are in USD/MT

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