US coking coal exports down in 2019

US coking coal exports in 2019 fell by 11.32pc from 2018 to 50mn t, trade data shows, amid weak demand from China, Europe and Brazil as mills reduced their raw material requirements.

But demand in Japan rose, as did Indian demand in the second half of 2019. US coking coal exports reached a four-year high in 2018, but fell below 2017 levels last year.

Exports to China fell to 1.06mn t in 2019, down 45.6pc on the year, and 60pc below the 2017 volume of 2.7mn t. Shipments to China fell by 930,000t in the first half of 2019 from 1.6mn t in the first half of 2018, accounting for almost 40pc of the decrease in US coking coal exports.

Shipments fell by 74.1pc in the second half of 2018 as China imposed a retaliatory tariff of 25pc on US coking coal in August that year. Shipments fell 53pc on the year to 104,450t in the third quarter of 2019.

The decline in US volumes provided room for Australia's exports of coking coal to China to increase by 7.52pc to 42.6mn t in 2019. But optimism over the progress in trade talks between the US and China pushed up US coking coal exports to China in the last quarter of 2019. The shipments in the quarter more than doubled to 288,800t on the back of expectations of an interim trade deal that might reduce the tariff. But since then, the tariff has only been reduced by 2.5pc, from a total tariff of 29pc after taking into consideration duties and port charges before August 2018.

Japan was an exception among major importers of US coking coal. Its import volumes rose by 8.64pc year on year to reach 6.03mn t in 2019 as Japanese mills turned to the US to cover for disruptions to shipments from Australia, which fell from 37.79mn t in 2018 to 35.22mn t in 2019 after a derailment halted coal deliveries at Dalrymple Bay Coal Terminal for five days in March.

Exports to India fell by 23.75pc in 2019 following the longest monsoon season in 60 years but remained above 2017 levels at 4.27mn t. Imports in the second half of 2019 were up 7.83pc year on year to 1.94mn t, and there is potential for further increase here as the Indian government plans to triple steel output to 300mn t/yr by 2031.

Exports to Brazil, the largest importer of US coking coal, have fallen below 2018 levels every month since July, with December volumes 30pc lower than a year before. Three major blast furnaces in Brazil were undergoing maintenance last year, which limited demand for coking coal. But a recent shift away from spot purchases towards long-term buying by some mills has led to expectations of increased demand from Brazil in 2020.

In line with steel capacity cuts across Europe, coking coal shipments from the US to the EU fell 12.2pc year on year to 16.1mn t in 2019, as Germany's Salzgitter and Sweden's SSAB idled mills in the last quarter and ArcelorMittal announced that it would withdraw from its lease agreement for Italian steelmaker Ilva. But there are market expectations that demand will increase from the second quarter of 2020 with the need to replenish stocks from April onwards after some European mills delayed shipments for the first quarter.

By Brendan Kjellberg-Motton

Key US and Australia coking coal exports in 2019