US coal export opportunities limited, but not by port infrastructure – Xcoal CEO

US coal exports have grown as a share of production in recent years, but further growth is likely limited, said Ernie Thrasher, CEO of marketing and logistics company Xcoal Energy & Resources, on March 19.

The US Energy Information Administration said in its most recent energy outlook that it expects exports to comprise about 19% of total demand for US coal production in 2024 and 21% in 2025, up from 14% in 2019, as decreasing domestic consumption weighs on overall demand. The US exported 99.8 million short tons of coal in 2023.

The US has the infrastructure to export "probably" up to 120 million short tons of coal, but that likely cannot rise much further, Thrasher said during a press conference at CERAWeek by S&P Global. The EIA projects that coal exports will rise to 100.8 million short tons in 2024 and then to 105.9 million short tons in 2025.

"We don't have the production to do it today," Thrasher said in response to an S&P Global Commodity Insights question. "In essence, the market won't absorb it even if we did produce it. ... The met coal market for steelmaking coal is pretty stable and the thermal coal market responds to arbitrage opportunities as they arise, but it is very difficult now for the US to compete in the global thermal coal market. The [export] capacity is there, but then the question becomes, is the supply there? Or is the demand there if the supply was there?"

Clarifying on demand, Thrasher explained that some countries, particularly in Asia, can offer coal demand, but that many US coals, whether due to quality, transportation logistics or other factors, will struggle to compete.

"We're in a period today of very high ocean freight rates because of the levels of world trade," Thrasher said. "So it's very hard for Midwestern or US East Coast coal suppliers to compete in Asia with the low-cost production that is already in Asia."

Thrasher also said that while he does not "want to downplay" the impact of Houthi attacks on shipping vessels in the Red Sea, coal exports have not seen much impact from those events. However, low water levels caused by drought around the Panama Canal have been a pain point for US coal exports.