Coal shipments out of U.S. ports in the second quarter were largely flat from the first quarter but took a double-digit beating from the year-ago period as the nation's largest metallurgical coal port's exports dropped by 28.2% year over year.
International thermal coal prices fell earlier this year and have remained low for months, which will likely limit producers' ability to compete overseas given the distance to customers. More recently, global coking coal prices have declined as well. Coal producers' total exports to Europe through ports in Baltimore, New Orleans, Norfolk, Va., and Mobile, Ala., dropped by roughly 4% from about 8.4 million tonnes in the first quarter to 8.1 million tonnes in the second.
Terminals in Norfolk, by far the nation's largest metallurgical export point with 7.1 million tonnes during the second quarter, saw a 28.2% year-over-year decline in total coal exports to 7.7 million tonnes during the recent period, according to data compiled by S&P Global Market Intelligence. That total represented a more modest drop of about 5.1% from the first quarter.
Metallurgical coal prices exceeded $200/tonne at times during the year-ago period but have dropped to roughly $150/t to $160/t more recently, experts said.

Arch Coal Inc. CEO John Eaves said on a July 24 earnings call that coking coal prices were strong for most of the second quarter, and despite weakened prices, he views the market as "generally well-balanced," noting his optimism on metallurgical coal supply.
"Australian coking coal exports were up modestly year over year during the first half of 2019 but continued to track well below the 2016 levels, the peak year for Aussie met exports," Eaves said. "And the U.S. coking coal exports declined nearly 10% in the first half of 2019 despite the strong pricing environment, again, underscoring the maturity of the U.S. coking coal reserves."
While Arch's European customers have shared concerns about the global economy, the company has not seen any pushback given current coking coal market conditions, President and COO Paul Lang said.
"I think people are being cautious," Lang said. "But right now, I haven't had a lot of concern relative to the customers not taking coal."
Contura Energy Inc. CEO David Stetson said on the company's Aug. 14 earnings call that Contura would lower its shipment guidance on Central Appalachian metallurgical and thermal coal to rationalize production through the end of the year "rather than being overly aggressive and selling at low returns into the buyers' market."
"While we think there's a potential upside to our revised met coal guidance, we believe at this time it's prudent to be more conservative given the softness we're experiencing at the end-use markets, most notably Europe and South America," Stetson said.
While producers shipping through the Virginia port saw a large drop in exports, coking coal miners exporting through the Mobile, Ala., port shipped 35.4% more coal year over year to seaborne customers during the period, a 17.8% increase from the first quarter. All told, the port shipped about 3.1 million tonnes of coal to international customers during the period, likely aided by a strong performance by Peabody Energy Corp.'s Shoal Creek mine, which produced 711,366 short tons of coal during the period, according to S&P Global Market Intelligence data.
Peabody President and CEO Glenn Kellow described the mine on a July 31 earnings call as "a tremendous addition to our seaborne met portfolio over the past six months."
"Really what we liked about Shoal Creek, other than the quality of the coal, the cost structure, was its access to those seaborne markets," Kellow said. "And we talked previously about the fact that we actually share common customers with some of our Australian portfolio."
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The Port of New Orleans, which largely exports Illinois Basin thermal coal, dropped from the third-largest coal-exporting port in the first quarter to the fourth-largest during the recent period. The port, which exported 35.8% more coal and petroleum coke in 2018 than in 2017, produced 35.5% less coal during the recent three-month period than in the second quarter of 2018, with 2.8 million tonnes. It also shipped 20.4% fewer tonnes compared with the first quarter.
Some Illinois Basin thermal coal producers are feeling the effects of low export pricing on coal sold into Europe, which may limit their opportunities abroad. Experts recently said the lower-cost producers in the region will be better positioned than their higher-cost competitors when tons that normally would be shipped internationally are directed to the domestic market instead.
The region was also plagued by logistical issues in the first half. Flooding in the Midwest resulted in high and swift water on the Mississippi River that delayed shipments downstream to the Gulf of Mexico for export.

