A secular decline in domestic demand continues to erode the size of the U.S. coal market. While U.S. producers have had some luck moving their product overseas in recent months thanks to an increase in international demand, opportunities at home have continued to shrink as more power plants announce plans to retire their coal-fueled facilities despite the Trump administration's aim to boost the sector.
Coal producers delivered 51.4 million tons of coal, 6.6% of the coal mined in the U.S. in 2017, to power plants scheduled to retire in the next 10 years, according to an S&P Global Market Intelligence analysis of production and fuel delivery data.
Of the roughly 330.6 million tons of coal produced from eight U.S. coal regions in the first half of 2018, at least 33.6 million tons, or 10.2%, of that coal was delivered to U.S. power plants that are slated to retire between 2018 and 2032.
As retirements continue, a report created by a coal industry-led council recommended the U.S. Energy Department take on a four-step strategy to assess and support the existing U.S. fleet of coal-fired power plants through reformed regulations and renewed investment in coal generation technology.
A draft version of the National Coal Council report, posted on the group's website Sept. 4, suggests assessing the value of the coal fleet, supporting the continued operation of the existing fleet with compensation for "all attributes" of coal-fired power plants, reforming the regulatory environment to allow permitted investments to recoup their costs, and developing a targeted research development and deployment program focused on increasing the efficiency, flexibility and competitiveness of the current fleet of coal plants.
The National Coal Council is also preparing a report on coal exports. The report, currently in draft form, suggests policies to help deploy advanced coal mining and processing technologies, streamline funding for the nation's inland waterway systems, enhance port and terminal capacity, eliminate policy and technology barriers to deploying coal plants to other countries, and support efforts to advance coal as a means of "economic development in international markets."
U.S. Energy Secretary Rick Perry had asked the council to prepare the reports, which will be voted on at a meeting later in September.
The U.S. saw a 25.8% growth in coal exports during the second quarter compared to the year-ago period, shipping about 7.8 million more tons overseas. Portugal and Egypt had the largest year-over-year increases during the quarter, up by 286.1% and 265.2%, respectively, according to data compiled by S&P Global Market Intelligence. India was the largest importer, buying 2 million tons more than Japan, the second-largest importer of U.S. coal during the quarter. India bought 5.1 million tons of U.S. coal, a 24.5% year-over-year increase and a 600,000-ton decrease from the first quarter of 2018. Japan's U.S. coal imports held steady, decreasing slightly from the first quarter and increasing by less than 1% over the second quarter of 2017.
According to the U.S. Census Bureau data, the country's coal exports totaled 8.7 million tonnes in July, down 6% from June and the lowest since 8.6 million tonnes was exported in March. However, that was up 32.8% from 6.5 million tonnes shipped out in the year-ago month.
Thermal coal exports totaled 4.3 million tonnes, up 2.4% from June and 61.3% higher year on year. It was the second-highest monthly export volume in the last five years, only behind 4.7 million tonnes in April 2018. It was also the first time that thermal coal exports exceeded metallurgical coal shipments since February 2015. Year-to-date thermal exports are at 28.2 million tonnes, up 44.8% from the first seven months of 2017.
Bituminous coal exports totaled 3.7 million tonnes in July, up 2.4% month on month and 82.5% from a year ago, despite India seeing a 31.5% monthly decrease. Meanwhile, metallurgical coal exports dropped to 4.3 million tonnes in July, down 13.1% from almost 5.0 million tonnes in June and the lowest since 4.2 million tonnes in January. However, July's total was up 12.8% from 3.8 million tonnes in the year-ago month.
National Coal Transportation Association: The association will hold its 44th Annual Business Meeting and Conference Sept. 10-12 in Denver.
National Coal Council: The organization will host its annual fall meeting Sept. 12-13 in Norfolk, Va.
Southern States Energy Board: The organization will hold its annual meeting Sept. 16-18 in Biloxi, Miss.
S&P Global Platts: The organization will hold its 41st Annual Coal Marketing Days Conference Sept. 20-21 in Pittsburgh.