Dropping Chinese demand for imported thermal coal will likely have the biggest impact on US producers who sell into markets across the Atlantic, global research firm Wood Mackenzie said Wednesday, December 17.
That is because the estimated 25 million mt (27.6 million st) drop in imports from 2014 to 2015, which was ordered by the Chinese government to both protect local mining interests and the environment, will push lower-cost Indonesian and Australian thermal coal into the Atlantic, said Jonny Sultoon, an Annapolis, Maryland-based senior analyst for Wood Mackenzie.
"There is a volume shift taking place back into the Atlantic Basin that is a threat for US exports," Sultoon said.
South Africa, which can sell to either the Pacific Basin or the Atlantic Basin, is now shifting back to the Atlantic, he said.
Russian coal also is outcompeting US thermal coal in the Atlantic because the drop in the Russian currency has made Russian coal cheaper, Sultoon said.
"US thermal doesn't have an outlet anymore," he said.
Powder River Basin producers, who typically export thermal coal through Canadian ports into non-Chinese Asian markets such as Taiwan, South Korea and Japan, are less likely to be affected than their Appalachian and Illinois Basin counterparts, Sultoon said.
"The PRB is generally less exposed because it's a different type of coal," he said. "It's a different market."
PRB producer Cloud Peak Energy -- which earlier this year secured additional throughput capacity through Westshore Terminal in Vancouver, British Columbia, for 2015 -- sees long-term demand from its customer base in South Korea, Japan and Taiwan, said Rick Curtsinger, a spokesman for the Salt Lake City-based company.
"Certainly the coal from the PRB has low-sulfur and ash contents, which are important for utilities across the US and Asia," Curtsinger said.
"The PRB continues to be well-positioned to meet a number of market needs throughout Asia because it has lower sulfur content than anywhere else around the world."
