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Coal exports from US port fall

World Coal,

One of the top coal shipping ports in the US – Hampton Roads – has announced a significant fall in coal exports, as analysts warn downward trend could continue.

Coal exports fell 12% over H1 2014 compared to H1 2013 (which was Hampton Road’s best coal exporting year since 1992).

David Host, chairman and CEO of T. Parker Host, said that he expected to see a downward trend over “the rest of the year”.

Host said the fall in coal exports from Hampton Roads and other US ports could be attributed 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, have been forecast to drop by more than 20% from last year, according to some analysts.

Through the first five months of this year, metallurgical coal exports through the port ran about 64% 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.

Host said “the great China story,” in which the country’s fast-growing economy would continue to boost world demand, has not quite fitted the plotline.

An Old Dominion University study released in Autumn 2013 calculated the impact of coal shipments through Hampton Roads. It estimated that in 2011, the year studied, the more than 42 million t moved through port terminals generated roughly US$ 900 million in goods and services and nearly 4200 jobs locally. That included indirect effects.

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

Volume over the course of 2014, however, has fallen. 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, said it was important to keep things in perspective.

US 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.” The extra production has added to a glut of coal worldwide that has driven prices down, he said.

Central Appalachian coal, much of which moves through Hampton Roads, is regarded as among the highest-quality coal available, but it is 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 US 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 US 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 US$ 5/t to transport metallurgical coal to the terminals in Hampton Roads and Baltimore.

Edited from various sources by Sam Dodson

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