U.S. West Coast Coal Exports Increase (Bloomberg)
U.S. West Coast Coal Exports Rise as Mexico to China Buy
Coal exports from the U.S. West Coast rose to the highest in more than a decade amid demand from Mexico and Asia, providing a market for the power-plant fuel amid lower domestic consumption.
Shipments from the western U.S. are up 35 percent to about 5 million tons through the first six months of this year, led by an almost six-fold jump in cargoes leaving San Francisco, according to the Energy Information Administration. That comes even as nationwide exports have fallen 15 percent.
The rise in exports underscores how producers have found ways to sell the fuel to countries including Mexico, China and Japan even amid a global glut. Deliveries from the West Coast are climbing even as plans to build terminals have been stymied by environmentalists. The EIA estimates U.S. demand this year will be down 17 percent from 2007 as new federal emissions regulations prompt utilities to shut plants.
“They’re burning it,” said Ted O’Brien, president of Doyle Trading Consultants LLC in New York, in a telephone interview yesterday. “It’s something not a lot of people saw coming. It’s an added bonus.”
Most of San Francisco’s shipments have gone to Mexico, where purchases of U.S. coal have risen 17 percent in the first half of the year, data from the Energy Department’s statistical arm show.
Utilities along Mexico’s coast are burning coal mined from the Uinta Basin, a region that covers parts of Utah and Colorado, James Stevenson, Houston-based director of North American coal at IHS Energy, said in a telephone interview yesterday. Union Pacific Corp. moves the coal on trains through the Rocky Mountains to the California ports, he said.
Uinta Basin coal has risen 5 percent to $37.75 a ton in the past year, data compiled by Bloomberg show. The coal has a higher heat content than the variety found in Wyoming’s Powder River Basin, while emitting less pollutants than Eastern coals.
San Francisco has also shipped coal to China and Japan, where consumption of the fuel has increased since the Fukushima nuclear disaster in March 2011. Exports from the city in the first six months of the year were at 1.4 million tons, compared with 1.34 million in all of 2013.
Other West Coast ports are flourishing as well. Coal shipped from Los Angeles has risen 14 percent through the first half of this year, while Seattle shipments have increased 2.4 percent, according to the government data.
More than 800,000 tons of thermal coal left the west coast in May, the most since at least the turn of the century, according to IHS.
“In the good times, no one’s really getting the oddball tons to work,” Stevenson. “But you start seeing that” when the market is down.
Foreign markets help U.S. producers because they’re able to boost output and spread costs, O’Brien said.
“The companies can run their mines harder, lower costs and dump whatever excess coal into the export market,” O’Brien said in a telephone interview yesterday. “It’s a small piece, but in the past it’s been a very profitable outlet.”
Even as eastern U.S. exports fall from year-ago levels, robust Indian demand has tempered declines, O’Brien said.
While foreign shipments from the East Coast are down 16 percent, deliveries to India have surged 57 percent to about 3 million tons, EIA data show. The U.S. exported a total of 3.9 million tons to the country in 2013.
“India’s been a bright spot out of the East Coast,” O’Brien said. “They’re a very strong story in terms of seaborne coal demand.”
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