Japanese coal burn slips to historic low in May

  • Market: Coal
  • 03/09/20

The Covid-19 pandemic drove Japanese coal-fired power generation to a more than four-year low in May, although the fuel's cost advantage for power generation saw output hold up better than LNG.

Japanese coal-fired generation dropped by 11pc on the year to 16.8TWh in May, with consumption down by nearly 10pc to 6.5mn t, according to energy ministry data released this week. This represents the lowest demand since before April 2016, when the government began publishing granular generation data, although consumption and imports have since shown signs of recovery and may benefit further from lower nuclear availability in the fourth quarter.

Weaker demand helped to push coal stocks to 9.9mn t as of the end of May, up from 9.4mn t 12 months earlier and the highest since before April 2016.

The impact of Covid-19 on overall power demand weighed heavily on coal consumption, with national output from all sources falling by 10pc on the year to 56.3TWh in May. But coal burn was hit less hard than gas, following the start-up of new coal-fired units earlier in the year and the fuel's continuing cost advantage over oil-linked LNG for power generation.

Japanese gas-fired generation fell by 19pc on the year to 19.6TWh in May, accounting for only 53.9pc of aggregate output from coal and gas. This was down 2.3 percentage points on the year. Over January-May, coal and gas accounted for 46pc and 54pc of total generation from the two fuels, respectively, compared with 43pc and 57pc shares in the first five months of 2019.

Coal's cost advantage over LNG helped to counter some of the overall weakness in power-sector demand for the fuel, but the sharp decline in oil prices in the spring is now filtering through to oil-linked LNG import prices. This has narrowed coal's advantage and may encourage utilities to ramp up their use of gas-fired capacity at a quicker pace than for coal in the near-term, as nuclear generation dips amid a busy maintenance schedule in the second half of 2020.

Based on the average import prices of bituminous coal with more than 8pc ash and LNG in July, the implied generation costs for a 42pc-efficient coal-fired plant and a 60pc-efficient gas-fired plant would be $27.44/MWh and $43.31/MWh, respectively. This would give coal a $15.87/MWh advantage, down from as high as $27.18/MWh in May.

Japanese coal imports, including bituminous and sub-bituminous coal and lignite, fell by 17.7pc or 2.4mn t on the year in July, while LNG receipts were down by 11pc at 6mn t. January-July imports were down by 4.2pc at 76.3mn t for coal and by 6.6pc at 42.1mn t for LNG.

Weaker imports from Japan's biggest supplier Australia drove the decline in July and the year to date as a whole, falling by 1.4mn t on the year in July and by 3.2mn t in January-July. Imports from Indonesia and Russia rose by 1mn t and 750,000t, respectively, on the year in January-July as buyers have looked to diversify their supply mix, but receipts from both countries fell on the year in July.

Japanese Jan-Jul thermal coal imports mn t

Japanese coal imports vs coal burn TWh, mn t

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27/03/24

Hampton Roads may have space for Baltimore coal exports

Hampton Roads may have space for Baltimore coal exports

Houston, 27 March (Argus) — Terminals in Hampton Roads, Virginia, may have some available capacity to take rerouted coal shipments from Baltimore, Maryland, despite increasing exports from a year earlier for the seventh consecutive month in February. Coal loadings at Hampton Roads reached an estimated 3.31mn short tons (st) (3mn metric tonnes) last month, rising 7.8pc from February 2023, according to the Virginia Maritime Association. Still, historic Hampton Roads export data going back to 1993 showed that combined shipments from the three terminals in the region peaked at 5.48mn st in April 2012, which is nearly 66pc higher than last month's exports. This suggests that Hampton Roads terminals may have capacity to load additional coal volumes that were originally booked to ship out of terminals upstream from the Francis Scott Key Bridge in Baltimore, which collapsed on Tuesday morning, closing the Port of Baltimore for an indefinite period of time. The two Baltimore coal terminals cut off by the bridge collapse, Consol Energy's Consol Marine Terminal and CSX's Curtis Bay Coal Piers, have a combined export capacity of about 34mn st. Railroad Norfolk Southern (NS), which operates the Lamberts Point terminal at Hampton Roads, said today it is working with impacted international customers and port partners to "provide alternate routing solutions." "Ports on the east coast are resilient and have the capacity to serve the flow of freight," NS said. Lamberts Point terminal handled 1.19mn st of coal in February, a 20pc jump from February 2023. Despite this increase, that is still down from the 2.18mn st exported from the terminal in April 2012. Dominion Terminal Associates (DTA) exported 1.24mn st of coal in February from the Hampton Roads area, which is down 30pc from April 2012, while exports from the nearby Pier IX terminal were down 53pc to 727,023st last month. DTA's co-owners, Alpha Metallurgical Resources and Arch Resources, and Pier IX's owner Kinder Morgan all did not respond for immediate comment. By Anna Harmon Hampton Roads coal exports in 2012 st Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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RMKO, Atlas to develop Sumatra coal crushing plant


27/03/24
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27/03/24

RMKO, Atlas to develop Sumatra coal crushing plant

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Baltimore bridge collapse forces freight changes


26/03/24
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26/03/24

Baltimore bridge collapse forces freight changes

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The two terminals loaded 2.4mn t of coal in February, up from 2.1mn t a year earlier, according to analytics firm Kpler, mostly exports to India and China. An India-based trader said that the suspension of coal exports will probably raise prices in India, as brick kilns enter the peak production season in the summer. Buyers could look to petroleum coke as a substitute, but the higher sulphur content may not be appealing to some users despite the higher calorific value. Prices for deliveries to northern Europe are also likely to rise given that the Netherlands, Germany and Belgium combined are the second-largest market for North Appalachian coal. April API 2 futures rose by $2/t to $113.30/t. The incident has added a "level of volatility [which] could have big implications," a European paper broker said. The lack of information has prompted some coal producers to hold off on activating force majeure clauses in their contracts. 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They may need the cash so will be forced into a decision. The producers most vulnerable to delays may be Consol and Arch Resources. Arch's Leer coking coal mine may be in the best position because it co-owns Dominion Terminal Associates in Hampton Roads with Alpha Metallurgical Coal Resources. The sudden lack of export capacity could put a floor under US coal prices, which have mostly been falling since last year amid low domestic demand. The competition to replace Baltimore coal exports could prevent further cuts, another coal trading source said. Metals sources say the accident will have only isolated effects on the global ferrous scrap market, but many market participants are still assessing the situation. The port is the 10th largest ferrous scrap export port in the US, and over the last five years an average of 44,000 metric tonnes/month of ferrous scrap was exported from Baltimore, according to US Department of Commerce data. But the port closure is likely to affect other freight. Baltimore is the nation's top handler of automobile traffic. Motor vehicles and parts accounted for about 42pc of all Baltimore port imports and 27pc of all exports, according to state data. The Port of Baltimore handled 847,158 cars and light trucks in 2023. "It's too early to say what impact this incident will have on the auto business — but there will certainly be a disruption," said John Bozzella, chief executive of industry trade group Alliance for Automotive Innovation. Dry bulk freight rates likely unaffected Several sources told Argus Baltimore's closure is unlikely to have a major impact on dry freight rates despite short-term interruptions to coal transports. "We are in the shoulder months with less demand for thermal coal," a shipbroker said, suggesting mild global temperatures means the collapse "may not have too much of an impact" on freight markets overall. Vessel traffic in ports such as Charleston, South Carolina, and Savannah, Georgia, may increase on diversions from Baltimore. Kpler identified 17 vessels that will likely be impacted because they are either in the Port of Baltimore or were expected to load there in the coming days. By Abby Caplan, Gabriel Squitieri, Luis Gronda, Evan Millard and Brad MacAulay Port of Baltimore coal terminals Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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US bridge collapse may weigh on dry freight rates


26/03/24
News
26/03/24

US bridge collapse may weigh on dry freight rates

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Stuck Baltimore coal may raise prices in India, Europe


26/03/24
News
26/03/24

Stuck Baltimore coal may raise prices in India, Europe

London, 26 March (Argus) — The blocking of two coal terminals in the key Baltimore US coal export hub this morning following a bridge collapse will mostly hinder North Appalachian coal exports to India for the brick kiln industry. Most thermal coal exports from Baltimore's two coal terminals, Consol Marine Terminal (CNX) and Curtis Bay Piers, flow to India, with 12.4mn t shipped last year and 6.3mn t in 2022, US customs data show. Baltimore exported just over 900,000t to India in January, up from 364,000t a year earlier. The port did not provide a timeline as to when the terminals may resume coal exports as of 26 March. Suspended North Appalachian shipments will probably raise prices in India, as brick kilns enter the peak production season in the summer, an India-based trader said. The brick kiln industry typically consumes very-high calorific value NAR 6,900 kcal/kg North Appalachian coal. Buyers could look to petroleum coke as a substitute, but the higher sulphur content may not be appealing to some users despite the higher calorific value. US petroleum coke is currently more competitive than coal for Indian buyers, based on Argus spot price assessments. The price of cfr India 6.5pc sulphur coke averaged $3.74/mn Btu over 4-25 March, compared with $4.16/mn Btu for high-sulphur Illinois basin coal, the next cheapest alternative. North Appalachian coal averaged $4.86/mn Btu over the same period, down from $5.02/mn Btu in January. Some US coal is sold to India under term contracts on an API 2 index-linked price basis. Europe The Netherlands, Germany and Belgium are the second-largest market for North Appalachian coal, with close to 310,000t sent there from Baltimore terminals in January, up from just above 200,000t a year earlier. April API 2 futures rose sharply this morning to $115/t but had eased slightly to $114.50/t by noon. The incident has added a "level of volatility [which] could have big implications", a European paper broker said. In the physical market, an April-arrival 50,000t multi-origin cargo was bid at $125/t des Amsterdam-Rotterdam today, flat on yesterday. But most US material does not trade on these terms because of varying calorific value, sulphur and chlorine levels. Only around 50,000 t/month of US Scota coal is available, a European physical broker said, but this may be exported from Gulf coast ports, a different broker said. Scota — the standard coal trading agreement — is a set of terms and specifications used to trade NAR 6,000 kcal/kg coal in Europe. Some US North Appalachian cargoes were blended with metallurgical coal a year ago to reduce the calorific value and meet Scota contract specifications, but the high free-swelling index (FSI) content caused problems for power plants because this made it harder to burn as some particles do not ignite, creating more ash. Logistics North Appalachian coal producers could rail volumes around 250km south to the Hampton Roads port complex in Virginia, but this would add to railing costs. Hampton Roads typically handles Central Appalachian coal. Some North Appalachian coal is barged south to New Orleans when the eastern terminals at Baltimore and Hampton Roads become congested, according to a barge operator. The CNX Marine Terminal can store up to 1mn t and exported 19mn t of metallurgical and high calorific-value thermal coal last year, according to its full-year 2023 results. The 79,000t Klara Oldendorff is currently loading thermal coal at CNX Marine Terminal and the 79,000t Jy River is loading coal at Curtis Bay Piers. Some 22 ships are currently inside the port, of which 13 are expected to load coal. By Evan Millard Baltimore thermal coal exports mn t Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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