Following a strong export market in 2018, U.S. coal producers shipped about 7.7% less coal abroad year over year during the first quarter of 2019 as thermal coal pricing into Europe declined.

U.S. coal miners shipped 23 million tonnes of coal to other nations during the first three months of the year, an 11.9% decrease from the fourth quarter of 2018, according to data compiled by S&P Global Market Intelligence. India was the top destination, with nearly 4 million tonnes of coal arriving in the subcontinent during the period, a 14.9% decrease from the first quarter of 2018.

Ports in the Netherlands that serve as the initial point of entry for many U.S. coal shipments to the European market received more coal than India in the fourth quarter of 2018 but ranked second during the recent period. Though much of Western Europe is moving away from coal-fired generation and the API2 benchmark, which tracks the price of thermal coal sold into Europe, dropped significantly, European imports of U.S. coal through the Netherlands rose by 44.8% year over year to 2.9 million tonnes.

Gregory Marmon, a senior research analyst at Wood Mackenzie, said in an interview that the increase in European imports may reflect the contracts signed six months ago, but he expects imports to the continent to normalize given Europe's lessening demand for coal.

Peabody Energy Corp. President and CEO Glenn Kellow said on a May 1 earnings call that India imported 16% more coal through March. He said the Association of Southeast Asian Nations, or ASEAN, continued to be a "strong driver" of seaborne thermal demand as well, with year-to-date imports increasing 23%.

"We expect this trend to continue with ASEAN demand leading the growth in 2019 of seaborne thermal coal demand," Kellow said.

With regards to the seaborne metallurgical market, tight supply-demand fundamentals supported "robust" seaborne coking coal prices, Kellow said, with spot hard coking coal prices averaging $206/t during the first quarter. Peabody expects metallurgical coal imports across the industry to increase by 5 million to 10 million tonnes year over year in 2019, largely due to demand growth led by India, Kellow said, as well as a 2% increase in global steel demand.

Arch Coal Inc. President and COO Paul Lang said its 2019 exports will be down by about 1 million tons year over year, most of which will come from its thermal business, following the drop in thermal pricing. Alliance Resource Partners LP is also delaying the growth of its Illinois Basin operations, a move that is expected to reduce planned volumes by nearly 1 million tons in 2019.

"Internationally, we continue to believe the long-term supply-demand fundamentals of the global coal markets will provide opportunities for ARLP's strategically located, low-cost mines," Alliance CEO Joseph Craft said. "In the short term, however, these markets are under pressure. While we expect opportunities for coal exports to develop later this year as markets improve, it is difficult to predict the timing of when conditions will become favorable."

The API2 prices were affected by strong renewable power generation and low European natural gas prices, according to Foresight Energy LP CEO Robert Moore. The company has received a premium to API2 prices in other markets, he said, and successfully sold coal in Egypt, South America and Asia.

"We do believe that improved API2 index levels will be recognized as European generators exit the shoulder period," Moore said. "Domestic coal markets have been subdued as a result of a lack of generating demand throughout most of the winter and the current shoulder period."

European buyers may be largely contracted in the near term, which limits spot opportunities and forces traders to try to sell their coal elsewhere, said Kevin Stanley, chief commercial officer of Contura Energy Inc. The limitations have pushed traders to other markets, such as South America, which has "experienced aggressive pricing competition" as traders try to move coal off their books, he said.

Consol Energy Inc. CEO James Brock said API2 prices declined 20% in the first quarter and by 33% through April 30 "due to pullback in global LNG prices, weak weather-related demand in Japan and Korea and softening demand in Europe due in part to an influx of Russian coal."

CFO David Khani said Consol expects to see global export thermal coal shipping to recede as well as multiyear demand growth from new coal-fired generation being built.

"Outside of these cyclical down-dips we continue to believe that high BTU, seaborne thermal coal has favorable supply-demand dynamics," Khani said.