Energize Weekly, April 3, 2019
Exports of U.S. coal reached their highest level in five years, 116 million short tons, in 2018, even as domestic consumption continued to decline. The figures are based on foreign trade data from the U.S. Census Bureau.
The U.S. exported 15 percent of its coal production in 2018, particularly metallurgical coal used in making steel, with most of that coal heading to Asia. That was the largest share of U.S. coal production ever shipped overseas.
The U.S. exported 62 million short tons of metallurgical coal and 54 million short tons of steam coal in 2018.
U.S. coal exports have been rising since 2016 as an increase in international prices have made it more attractive to ship coal abroad.
Coal export prices have increased over the past two years with an average price in 2018 of $59 a ton for steam coal and $138 a ton for metallurgical coal. Metallurgical coal, a key in steel production, is more valuable than steam coal, which is burned to create heat for industrial processes or generate electricity.
Increased demand in China and India in 2017 and 2018 has helped to raise metallurgical coal prices across Asia, which accounts for about 75 percent of international metallurgical coal trade. Metallurgical coal exports have grown to triple domestic demand for the coal, resulting in the international market having the biggest impact on prices.
U.S. steam coal exports to Asia have quadrupled since 2016 to 20 million short tons in 2018, accounting for 40 percent of all U.S. coal exports, with India, Japan and South Korea as the prime markets. U.S. steam coal has also entered new markets including Egypt, Thailand and Ukraine.
Steam coal exports, in comparison to metallurgical coal exports, have a limited impact on domestic coal prices since steam coal exports are less than 10 percent of steam coal demand.
In 2018, 85 percent of U.S. coal production was sold to domestic users, primarily the power sector and industrial customers. Since its peak in 2008, domestic coal consumption has been declining. The Energy Information Administration estimated that U.S. coal consumption dropped 4 percent between 2017 and 2018 to 691 million short tons—its lowest level since 1979.
The power sector, which is the largest customer for steam coal, is continuing to close aging coal plants and replace them with natural gas-fired capacity and renewable generation. About 13 gigawatts were shuttered in 2018, and another 4 gigawatts is slated to be closed in 2019.
