Consol increasingly tapping into export markets amid declining domestic demand

Pennsylvania-based Consol Energy Inc. is increasingly tapping into demand for its coal abroad and furthering its pivot to the export market, President and CEO Jimmy Brock said on a May 4 call to discuss quarterly earnings.

Consol shipped 6.9 million tons of coal in the first quarter, the company's highest shipment level since the second quarter of 2019. The company placed 3.3 million tons into the export market, representing about 48% of its quarterly coal shipments. In terms of absolute tonnage and a percentage of shipments, the first quarter was the highest in history for the company's Pennsylvania coal complex.

"We have continued to steadily diversify our global customer base and end-use markets since 2019," Brock said on the first-quarter earnings call. "We have not only strengthened our relationships with existing global customers, but we're now serving several new international end-users as well."

The company noted that global customers are providing competitive pricing compared to domestic buyers. Much of the coal Consol is exporting is being used in industrial, nonpower generation applications, according to its earnings release.

"This heightened focus on export sales is consistent with our strategy of further reducing our exposure to a declining U.S. coal market," Brock said. "We continue to maintain the vast majority of our core customer base and continue to see improvements in our customers' contracting appetite."

Consol's Pennsylvania coal complex produced 7.0 million tons of coal in the first quarter, up from 6.0 million tons in the same period of 2020. Prices for petroleum coke remain high due to lower oil production, which has been improving demand for Northern Appalachia coal in places such as India, the company wrote in its recent earnings report.

Brock said he expects to continue to see Consol move toward export demand, particularly given the company's advantages from owning its export terminal in Baltimore.

Consol reported a first-quarter net income of $26.4 million, increasing from $2.5 million year over year. The company is targeting coal sales of 22 million to 24 million tons in 2021.