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US Coal Exports Decline on Lower EU Demand

US Coal Exports Decline on Lower EU Demand

Washington, DC – US coal exports have continued to decline from their record volumes in 2012 with exports during the first half of this year totaling 52.3 million short tons (MMst), 16 percent below the same period in 2013.


Most of these exports go to countries in Europe and Asia, according to the US Department of Energy.


The decline, the agency said, reflects both lower European demand for steam coal and increased steam coal supply from Australia and Indonesia.


Metallurgical coal supply from Australia, Canada, and Russia has also increased. These factors have led to a cumulative decline of 9.0 MMst in coal exports to Europe and Asia during the first half of 2014.


Coal exports fall into two categories: metallurgical coal, which is used in the production of steel, and steam coal, which is commonly used to fuel boilers that generate steam used to produce electricity. With relatively minor coal imports, the US has been a net exporter of coal since 1949, the earliest year of data collection.


Metallurgical coal production, primarily from the Illinois and Appalachian coal basins, represented less than 8 percent of production but 56 percent of total US coal exports in 2013.


Europe is the leading destination for metallurgical coal exports, followed by Asia. Together, these two regions accounted for nearly 80 percent of US metallurgical coal exports in the first half of 2014.


Steam coal is mainly used to generate electricity, but also has applications at combined heat and power plants to produce steam used in industrial processes.


Steam coal generally has lower heat content than metallurgical coal and can be found at most coal-producing basins in the US. In recent years, steam coal accounted for more than 90 percent of domestic coal production.


During the first half of 2014, Europe received 8.8 MMst of US steam coal exports, a drop of 7.4 MMst from the same period in 2013. Asia’s share of US steam coal exports increased in 2014, but export tonnage to Asia decreased 2.4 percent from the first half of 2013.


In 2013, six US ports shipped 89 percent of US coal exports. Among them, Baltimore and Norfolk represent 55 percent, while Houston, Mobile, and New Orleans make up 30 percent. Seattle accounted for 5 MMst, or 4 percent, all of which was comprised of steam coal exports.


Eastern and southern ports are used to export metallurgical coal because it is produced in the Illinois and Appalachian Basins.



Giant Russian Steelmaker Shutters US Operations

Los Angeles, CA – Russian steelmaker Severstal is divesting itself of its steel production and coal mining operations in the US.

The move was reportedly motivated by the company’s fears that the increasing tensions between Washington and Moscow over the crisis in Ukraine will reduce, or even cut off, its access to loans from Western financial institutions.

Russia’s second largest steel maker said it would sell its two US steel facilities in Mississippi and Michigan for $2.3 billion to US rivals Steel Dynamics and AK Steel, respectively. Both plants produce steel products for the automotive sector.

According to a statement released by the Severstal, the company reported a $100 million loss on revenue of $3 billion last year, a development that it hopes will be offset by the US divestment.

“The sale of Columbus and Dearborn unlocks substantial value to Severstal’s shareholders,” said Alexey Mordashov, Severstal’s chief executive.

The ‘mini-mill’ in Columbus, Mississippi, is considered one of the most modern in the US, and is expected to increase its operating base by as much as 40 percent.

Steel Dynamics said the $1.6 billion purchase of “one of the most modern mini-mills in North America,” in Columbus, Mississippi, will expand its operating base by 40 percent.

The $700 million purchase of the Dearborn, Michigan, steel plant, “will add about one-third additional capacity to the company’s operations,” said AK Steel.

At the same time, Severstal said that it would sell US coal producer PBS Coals to Toronto, Canada-based Corsa Coal Corp. for a reported $140 million.

The sale comes after the Russian company paid about $1 billion for PBS in 2008 to provide a steady supply of coking coal for its US steelmaking operations.

Corsa said it will pay $60 million in cash, assume $60 million of reclamation and water-treatment liabilities, and give the former Russian owner the balance of $20 million “in collateral for other liabilities.”

The sale of PBS Coals is expected to be completed by mid-August, Severstal said.

PBS is located about 60 miles from Pittsburgh, Pennsylvania, and has 13 developed and three active mines that produced 1.7 million tons of coal last year.