EIA Forecasts U.S. Coal Exports to Rise 10% in 2018

Researched by Industrial Info Resources (Sugar Land, Texas)--Peabody (NYSE:BTU) (St. Louis, Missouri) announced an agreement last week to buy a metallurgical coal mine in Alabama from Drummond Company Incorporated (Birmingham, Alabama) for $400 million.

Located on the Black Warrior River in central Alabama, the Shoal Creek mine serves Asian and European steel mills with coking coal. The mine now produces about 2 million tons per year of high-quality, hard coking coal, the company said. Coal from the mine is transported by barge to the Gulf of Mexico via the Port of Mobile, Alabama, where it has access to overseas markets. Peabody said in a press release that the purchase represents the next phase in the company's plans to upgrade its metallurgical coal platform. For more information on Shoal Creek, see Industrial Info's plant report.

The purchase comes at a time when U.S. coal producers have seen a significant upswing in exports. Coal exports are forecast to jump by 10% (10 million short tons) in 2018 over exports in 2017, according to the U.S. Energy Information Administration's (EIA) monthly Short-Term Energy Outlook (STEO) for September. This compares with an August forecast of an increase in coal exports by just 5.7%.

The September STEO forecasts the jump in exports despite a projected 1% decline in U.S. coal production to 768 million short tons and a 2% decline in domestic coal consumption in 2018.

The EIA estimates U.S. coal exports through the first half of 2018 were 32% (14 million short tons) higher than in the same period of 2017, and June was the second month of this year that exports exceeded 10 million short tons. The EIA forecasts total coal exports to be 107 million short tons in 2018. Three of the top five destinations for U.S. coal exports are in Asia, with India, South Korea and Japan accounting for more than one-third of U.S. exports through March, the most recent month for which the EIA said it has actual data. Exports of steam coal (for power plants) totaled 1.4 million short tons in the first quarter of 2018, up 12.5% from exports in first-quarter 2017. First-quarter 2018 exports of metallurgical coal totaled 612,215 short tons, down 12.7% from first-quarter 2017 exports.

The EIA forecasts that U.S. coal exports will decline to 101 million short tons in 2019, but this still is more than the 97 million short tons of coal that were exported in 2017. Exports in 2017 were 61% higher than what they were in 2016.

Industrial Info is tracking four U.S. coal terminal projects worth nearly $648 million, including two that are tied to Millennium Bulk Terminals' (Longview, Washington) controversial plan to build a 44-million-ton-per-year coal export terminal in Longview. Washington Governor Jay Inslee's administration has blocked permitting for the two-stage project, citing public health and environmental concerns. That action has sparked a federal lawsuit that has several states weighing in on both sides. According to news media reports, at least six states have filed an amicus brief in support of the Washington governor, while six inland states have filed briefs in support of the coal terminal project. For more information, see Industrial Info's project report.

Industrial Info also is tracking $1.76 billion worth of bituminous coal, lignite and anthracite mining projects in the U.S. that have a medium or high likelihood of moving forward as planned.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.