Coal exports a major focus for US producers as supply needs change: execs
Miami (Platts)--31Jan2013/501 pm EST/2201 GMT
A lack of global supply to meet projected overseas demand for thermal coal has US coal producers shifting their focus to exports, said executives Thursday at the Coaltrans USA conference in Miami, Florida.
"When you look at demand growth around the world, and try to match that with supply, they don't match up, so there is clearly a gap," said John Eaves, CEO of St. Louis-based Arch Coal.
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Overseas prices are down currently and as a result, export margins are tight, said Kevin Crutchfield, CEO of Alpha Natural Resources.
But based on long-term projections made by the company and the US Energy Information Administration, which predicts coal will become the world's primary fuel for electricity generation within the next few years, Crutchfield said the company is changing its strategy.
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WEST COAST TERMINALS WILL HAPPEN: ARCH
"We think we'll win this fight," said Eaves, commenting on the proposed terminals in Washington and Oregon. "It will take a while but -- I think port capacity on the West Coast is important, because over time we think more Western coals will be going into Asian markets."
Eaves said planned US port expansion could push the nation's export capacity to 250 million tons by 2017.
Five terminals have been proposed in Washington and Oregon. A sixth coal export terminal at Port of Grays Harbor's Terminal 3 in Hoquiam, Washington, was proposed by RailAmerica, but the short-line railroad decided to shelve plans for the 5.5 million st facility in August 2012.
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2013 EXPORT OUTLOOK
Exports were strong in 2012 but this year, it's "not quite competitive," said Beyer. "The netbacks today into China and India are not there, so we saw a drop-off in the fourth quarter," he said.
He added that Illinois Basin coal seems competitive into Europe, but that with the sulfur discount, the netback is actually not competitive. "But as those markets improve, [we] will see IB participate more in the market," he said.
US coal exports are likely to remain flat in 2013 compared with 2012 but are likely to grow in 2014 and beyond, said J. Christopher Haberlin, vice president of research for Davenport & Co.
Haberlin, like Eaves, said new export terminals in the Pacific Northwest would be a "game changer" that would likely boost US coal exports past 200 million tons annually.
--Andrew Moore, andrew_moore@platts.com
--Edited by Lisa Miller, lisa_miller@platts.com