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Foreign demand is good news for US coal

CONTINUOUS growth in foreign coal demand, particularly for low-calorific grades, is providing exp...

Staff Reporter
Foreign demand is good news for US coal

In 2011, China’s coal consumption increased 9% to 3.8 billion tonnes, its 12th consecutive yearly increase. This makes China the largest consumer, producer and importer of coal on the planet, accounting for 47% of global coal use.

“There are enhanced opportunities for exports of American coal to China to feed some of that demand,” US Chamber of Commerce’s Institute senior director of policy Heath Knakmuhs said.

“While China does have significant internal coal resources they’re often far away from load centers. It does provide an opportunity for American coal suppliers – especially those located in the western US to export enhanced amounts to China.”

US Q3 2012 exports to Europe totalled 16.9 million tons compared to only 6.9Mt exported to Asia. China, specifically, made up only 10% of the US’s Asian exports or about 2.3% of total exports for the September quarter.

International demand for low calorific value coal also continues to grow – a development which bodes well for Powder River Basin exporters.

Argus media released the results of a study this week identifying China and India as key low-CV markets. The report states that demand is set to increase in both countries due to transportation bottlenecks within China and the operational challenges of using domestic coal in India.

Indonesia is the main coal supplier for Indian and Chinese power plants and represents the most direct competition to US producers of low-rank coal.

Indonesia exported close to 330Mt of coal last year on low transportation costs, but Asia’s ever-expanding appetite for low-CV products could offer the US opportunities with buyers who wish to diversity their supply chain.

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