US thermal coal exports are expected to total 44 million mt in 2019, down 10 million mt from 2018, with another drop of 8.6 million mt in 2020 given uncompetitive US coal, according to S&P Global Platts Analytics.
US exports continue to slow this year, Platts Analytics said in a report, "with 1H19 US thermal exports falling 4.3 million mt y-o-y and preliminary vessel tracking data showing that they likely came in lower in July as well."
March-June, the report noted, exports came in lower "as high river levels and rumored contract defaults continue to impact vessel loadings on the Gulf Coast."
Platts Analytics lowered its full-year thermal coal export forecast to 44 million mt, a 10 million mt drop from 2018. In 2020, Platts analysts project another 8.6 million mt drop, "which is in line with our prior forecasts for a considerable slowdown in US thermal exports."
"CAPP and NAPP coals look uncompetitive as a supply source at ARA, and ILB deliveries face competition from Russian and Colombian coals," the report said, adding that falling petcoke prices should also make it harder to sell NAPP coal into India as a replacement for petcoke.
Colombian exports, as well, are dropping, down 4.9 million mt over the first six months of the year compared with the corresponding 2018 period.
Colombian exports over the first seven months of the year totaled 41.9 million mt, down 4.9 million mt from the year-ago period, leading Platts Analytics to revise its full-year export estimate to just under 73 million mt, a drop of 8 million mt from 2018.
"We continue to believe that weaker pricing and demand in the Atlantic Basin, and production challenges at Cerrejon will keep exports lower y-o-y over the remainder of 2019," Platts Analytics said. "In 2020, rising freight rates that make Colombian coal less competitive compared with other sources will continue to put downward pressure on exports."
Platts Analytics projects a "continued slowing of US and Colombian coal exports, which should support pricing."
SEABORNE PRICING ENVIRONMENT
"Global seaborne thermal coal prices fell again over the last month," following a modest rebound in July, Platts Analytics said. "With the slide in all of the major coal markets in August, prices have generally declined to their lowest points of 2019, a three-year low."
"Weak electricity and coal demand growth in China was the major driving factor," the analysts wrote.
Additionally, an oversupply issue remains in the Pacific region with higher exports from Indonesia and little export pullback from Australia.
Russian exports, as well, "do not appear to have pulled back as Russian suppliers continued to compete for market share in the Pacific Basin, though production growth has slowed," the report said.
"We continue to believe Pacific Basin seaborne thermal coal prices will remain under pressure over the short term as we maintain our view that Chinese import demand should fade in 2H19 and Northeast Asian import demand will end the year lower," Platts Analytics wrote.News Source: S&P Global