Glencore to rejig Australian coal amid China tensions

  • Market: Coal, Coking coal
  • 18/11/20

Switzerland-based trading and mining firm Glencore may cut its Australian coal production this year and indicate a lower target for 2021 than it achieved in 2019, as expectations grow among Australian mining firms that Beijing will continue to target Australian coal imports in the new year.

Australian mining firms' confidence is waning that Beijing's import ban on Australian coal is simply import quotas filling up, with many now concerned that the diplomatic and political disagreement between the two nations could disrupt trade flows into 2021. Several key coal mining firms and industry groups are exerting pressure on politicians in Canberra to patch up the trade relationship with Beijing, although are not yet prepared to publicly confront either national government over the spat.

The uncertainty around the future of Australian coal exports to China is leading several key mining firms to reconsider production plans at operations that are losing money at current prices. The scramble is on for marketing departments to find alternate buyers but the competition is fierce and margins are being eroded, forcing firms to look at their production profiles.

Glencore has been a leader in curtailing production without closing mines in Australia in response first to the Covid-19 demand downturn and now to China's ban situation. It took around 7mn t out of its Australian operations through a 2-3 week closure of most mines during September-October because of lower demand caused by the pandemic. It is likely to join several other Australian coal mining firms in closing many mines for around two weeks over Christmas. It has announced, in its joint venture with Chinese firm Yancoal, that it will cut 84 contractor roles at the Hunter Valley Operations mine in New South Wales.

Glencore's total Australian coal production during January-September was 13pc behind the same period in 2019. This gap is likely to grow for the full year, as most of the temporary shutdown that ran across 25 September to 17 October and the impact of Beijing's ban on Australian coal come through in this year's final quarter.

A clearer indication of Glencore's position will emerge at its investor briefing on 4 December, with more curtailments likely to affect production over Christmas and into early 2021. The weather may be a major factor this year, with the Australian Bureau of Meteorology warning of a wetter than usual November-April because of a La Nina pattern that could disrupt mines, rail and ports.

Argus last assessed high-grade Australian thermal coal at $59.02/t fob Newcastle on 13 November for 6,000 kcal/kg NAR, up from a low of $46.18/t on 7 September but down from $65.70/t at the start of the year. It assessed lower grade coal at $37.63/t fob Newcastle for 5,500 kcal/kg NAR, up from a low of $35.04/t on 7 September but down from $51.52/t at the start of the year.

Glencore coal production(mn t)
Jan-Sep '20Jan-Sep '19Jan-Sep ± %FY2019
Australian coking coal5.66.1-89.2
Australian semi-soft coking coal3.65.1-296.4
Australian thermal coal exports42.947.8-1064.2
Australian thermal coal domestic use4.96.2-218.6

Glencore thermal coal output for export (Jan-Sep) mn t

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28/03/24

'Weeks, months' to reopen Baltimore waterway: professor

'Weeks, months' to reopen Baltimore waterway: professor

Houston, 28 March (Argus) — It could take weeks or even months to clear debris and reopen the waterway under the collapsed Francis Scott Key Bridge in Baltimore, Maryland, according to a engineering professor at the nearby Johns Hopkins University. As of Wednesday, there was no official timetable for the reopening of the Port of Baltimore after a major highway bridge over the Patapsco River was hit in the early hours of 26 March by a container ship and collapsed, with the debris and ship blocking the waterway. "I'd be shocked if it's weeks, but I don't think it'll take even a year" to clear the waterway, structural engineer and Johns Hopkins professor Benjamin Schafer said Wednesday. He expects the rebuild of the bridge to take significantly longer. "I've lived through quite a few civil infrastructure projects and they're rarely less than 10 years. So I think that's what we're looking at," Schafer said. He noted that it took five years to build the original Francis Scott Key Bridge and seven years to repair the Sunshine Skyway Bridge in Tampa Bay, Florida, after a similar collapse in 1980. Still, "this is definitely not a national supply chain crisis," John Hopkins operations management professor Tinglong Dai said Wednesday. "The effect will be mostly local, mostly minimal and mostly temporary." The bridge collapse and port closure is also unlikely to trigger a global supply chain crisis, he said. The Port of Baltimore is an important but "niche" port specializing in automobile imports and exports, Dai added. "The supply chain has evolved...I have already seen a lot of rerouting happening." Automakers started adjusting their supply routes away from the top port for US vehicle imports the day of the collapse, including General Motors, Ford and Mercedes-Benz. Baltimore is also a major port for coal exports, which may start to shift to terminals to the south in Hampton Roads, Virginia. Freight rates for ships that carry coal could see increases in global markets Other commodities like asphalt and caustic soda that move through the port will see challenges, while organic agriculture imports may see less problems due to seasonal flows. By Nathan Risser Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Hampton Roads may have space for Baltimore coal exports


27/03/24
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27/03/24

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


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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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US bridge collapse may weigh on dry freight rates


26/03/24
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26/03/24

US bridge collapse may weigh on dry freight rates

New York, 26 March (Argus) — The collapse of a major bridge in the Port of Baltimore, Maryland, will likely put downward pressure on dry bulk rates as ship traffic in and out of the port remains closed indefinitely. Market participants differ on the extent of any such market pressure, however. "We are in the shoulder months with less demand for thermal coal," a shipbroker said, suggesting mild global temperatures meant the collapse "may not have too much of an impact" on dry freight markets overall. Some coal suppliers will be able to load their cargoes at ports such as Hampton Roads, said two shipbrokers. This could partly mitigate any potential downward pressure on rates from suspended vessel traffic in Baltimore that would come from decreased cargo demand. But a third shipbroker doubted much US coal could be diverted to other east coast ports. Panamax rates would likely decline because "coal, unlike other commodities cannot easily pivot to alternate ports," she said. The loss of cargo could expand Panamax tonnage supply in the Atlantic, she said. "It is conceivable that Panamax intended for coal will now head south as long as they can present grain clean lengthening tonnage lists which will drive down rates." Meanwhile, vessel traffic in ports such as Charleston, South Carolina, and Savannah, Georgia, may increase on diversions across many shipping segments from Baltimore, according to market contacts. By Gabriel Squitieri and Luis Gronda Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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