US coking coal exports decline amid cuts

US coking coal exports fell by 35.1pc on the year to 3.48mn t in October as shipments to Europe and Asia-Pacific declined, trade data show, reflecting steel capacity cuts and lower mine output.

As demand has fallen, US coking coal output is expected to decline, with up to seven bankruptcies among mining firms having occurred in the past year that will take around 4mn t/yr of production off the market by 2020, according to industry estimates.

Canada received the most coking coal shipments from the US in October, at 420,602t. But this was down by 22.6pc on the year, which was likely to have reflected increased consumption of domestic coal output and lower steel production in the country. US exports to Canada in January-October totalled 3.04mn t, down by 9.5pc on the year.

The Netherlands remained a key export destination for US coking coal in October, receiving 401,545t. But this was down by 46.7pc on the year, after higher imports were registered in August and September. Overall exports to the Netherlands were down by 18.3pc in the first 10 months of the year.

The decline in October shipments was in line with export trends for most of 2019, with the exception of January and March, taking year-to-date coking coal exports to 42.01mn t, down by 12.1pc on the year.

The largest quantity of US coking coal exports went to Brazil in the January-October period. But shipments to Brazil of 379,596t in October were down slightly on the year, by 2.97pc, while year-to-date shipments totalled 5.42mn t, down by 9.27pc. This could be attributed to three major blast furnace maintenance periods that have taken place in Brazil this year or have been extended. But Brazilian imports from the US have the potential to increase next year, with these facilities due to come back on line. US mining firms facing a decline in demand amid steel capacity cuts across Europe are hopeful that demand from Brazil will support their exports next year.

Japan accounted for the second-largest share of US coking coal exports in January-October, at 5.07mn t, up by 5pc on the year. But exports to Japan in October fell sharply to 321,490t, down by 66.8pc on the year, as Japanese steel mills cut production rates amid weaker steel prices.

Exports to South Korea also declined amid cuts in production rates. The US exported 143,160t of coking coal to South Korea in October, down by 59.4pc on the year, while year-to-date exports of 2.11mn t were down by 10.6pc on the year.

Counting on India and Brazil

Overall exports to the EU in January-October dipped by 11.2pc on the year to reach 14.09mn t and are expected to decline further next year with steel production expected to average at around 80pc of capacity, market participants said.

European mills have also been seeking to postpone fourth-quarter laycans for their coking coal shipments until the first quarter of next year, and this is likely to further impact total requirements as these deliveries roll over.

US producers are hoping that in addition to Brazil, India might offer some relief — and even China, depending on trade relations.

Following the longest monsoon season in 60 years and capital controls in the country, Indian demand for coking coal slowed since the second quarter. Year-to-date exports to India totalled 3.52mn t, down by 27.3pc on the year, but exports in October of 235,191t were up by just over 50pc compared with the same month last year.

With the Indian government looking to boost public spending, there is renewed optimism that demand will pick up in the new year.

US coking coal exports to China totalled 827,590t in January-October, just under 50pc of the volume shipped in 2018, as China imposed retaliatory tariffs on US coking coal imports. US producers are eager for trade talks to progress and for sales channels to China to open up again. But as of last week, US-China talks on a first-phase agreement had stalled, with Beijing asking Washington to roll back some of the previously imposed tariffs.