News
05/02/25
US met coal market mixed on China tariffs
London, 5 February (Argus) — US coking coal market participants are still
mulling their position since President Donald Trump reignited the country's
trade standoff with China and Beijing retaliated on Saturday with substantial
tariffs . Market sources said the retaliation will affect some coals more than
others, but disagree on the severity of the risk. Many US producers ramped up
exports to China in 2020 and 2021 following restrictions on Australian imports.
But trade flows have slowed in the past two years largely because of
lower-priced Russian and Mongolian met coal driving down Chinese price
expectations and wider weakness in the seaborne coking coal prices making US
sales to China less attractive. The Chinese tariffs announced yesterday apply to
US coal and other energy products such as crude and LNG . Starting on 10
February, a 15pc levy will be added to the pre-existing 3pc tax on US coking
coal imports for a total 18pc. The industry is cautious to draw conclusions as
China returns from holiday and a diplomatic solution to the dispute is still
deemed possible in light of the start date. But seller sentiment has generally
been negative on the threat of further downward price pressures in a struggling
market. "We are still hopeful that a trade war can be averted, or at least not
last too long. Trump does a lot of talking as part of his negotiation style, but
eventually, it is good for both countries to find a solution," one US producer
said. Expectations are for some US exporters to turn to India as an alternative,
but again they would face competition from Russian producers. Still, some in the
market question how real an impact the measures could have, in particular citing
the strong presence of Core Natural Resources' low-cost Bailey coal in the
shipment volumes to China. Market estimates suggest that around 2mn-3mn t of
Bailey coal was shipped to China last year, accounting for about 30-40pc of US
exports to China. Consol, part of the newly merged Core, reported an average
cash cost of $35.85/st for coal produced at its Pennsylvania mining complex,
where Bailey originates, in the quarter ending 30 September last year. "I don't
think it will be the consequence that everyone fears because the higher-quality
US coals are already too expensive [in China]," one European trader said. "The
Chinese are not looking to buy too much material." A common reason sellers give
for not dealing with China is that many Chinese buyers contractually expect US
sellers to take the risk of tariff hikes. The expectation is likely to deter
even more producers now that risk is soon to be reality. "I can't imagine anyone
in the US is going to be accepting that contract now," an Alabama-based supplier
said. Not all downhill But there may still be some upward support ahead for US
coking coal prices. US production has slowed over the past half year, first with
a fire shutting the Allegheny Metallurgical Coal's Longview mine in West
Virginia and more recently the fire at Core's Leer South mine resulting in a
force majeure . Heavy snow fall in December and mine operators cutting
additional shifts in a weak price environment has also curtailed output. In
Europe, ongoing production issues at the coking coal mines operated by JSW in
Poland may also add to a supply squeeze in the Atlantic. While Chinese tariffs
may push down prices of US coal, stronger Chinese demand for Australian coal
could potentially lend support to fob prices in Asia-Pacific too. How exactly US
supply will be diverted from China in the event of a trade war and how this will
affect prices is very much an open question. When China first imposed tariffs
during its trade war with the US in July 2018, Argus ' high-volatie A fob
Hampton Roads assessment rose by $22/t to its height in November. By the time
the dispute was wrapping up in 2020, prices had sunk to near $60/t below
pre-tariff levels. By Austin Barnes and Siew Hua Seah US coking coal exports
since 2019 by partner '000t Partner 2019 2020 2021 2022 2023 2024 India 4,260
4,035 3,235 7,657 8,400 9,604 China 1,064 1,485 10,337 2,432 4,846 8,123 Brazil
6,707 6,182 5,100 5,353 6,271 6,297 Netherlands 4,628 3,116 3,041 4,960 4,068
4,609 Japan 6,011 3,291 2,950 3,617 4,594 3,858 Turkey 1,442 2,469 743 1,361
1,387 2,270 Germany 405 33 1,006 1,424 1,315 1,193 France 1,085 773 612 1,185
999 1,041 South Korea 2,473 2,090 824 1,161 1,032 1,013 Spain 418 333 493 653
616 664 Tariffs pulled back in March 2020 — Global Trade Tracker US
high-volatile coal prices fob Hampton Roads $/t Send comments and request more
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