US coal terminal shutdown roils Atlantic trade
The shutdown of a U.S. coal terminal has sent some European buyers in search of backup supplies and has heightened concern about U.S. ability to meet surging export demand, industry officials say.
CONSOL Energy temporarily shut down its export terminal at Baltimore, Maryland, on Jan. 3 because of apparent weakening of a portion of a coal-loading pier. Early estimates are that repairs will take a month. Other U.S. companies are trying to close the gap. "We've seen increased activity in exports related to CONSOL's terminal shutdown. We're working with customers to fill the shortfalls," said Kim Link, spokeswoman for Arch Coal Inc.
Still, Europeans say the shutdown undermines confidence that U.S. mines, railroads and ports, historically focused on huge U.S. domestic demand, can fulfill increased European needs resulting from shifts in the world market.
"There's fear the U.S. cavalry might not ride to the rescue after all," a European coal trader said.
The other major eastern U.S. coal export center, southern Virginia, has more capacity than Baltimore, but U.S. coal for export already was in tight supply. Officials say U.S. steam coal exports could double to 20 million tons. Total U.S. production is more than 1 billion tons a year.
Europe needs U.S. coal to make up shortfalls because supplies from South Africa and elsewhere have been diverted to booming Asia or hobbled by infrastructure problems. Prices have skyrocketed, making U.S. coal more affordable.
So far, the impact of the Baltimore shutdown has been minimal, officials said.
"One or two utilities are having to replace delayed U.S. shipments, but I haven't seen anybody really panicking," a coal trader for a European power company said.
Expansion of production at Arch's Mountain Laurel mine in West Virginia has helped, Link said.
"From our standpoint, coal is still moving to its appointed destinations," said Randy Husband, spokesman for Norfolk Southern railroad, a big Virginia port operator.
An official at another U.S. coal company said the ultimate impact depends on how long the shutdown lasts.
"If it's down for a month or two, I don't see it as a big problem," the official said. "If it goes longer, I think it will have some serious impact."
The problem in Baltimore is settlement of 25 feet or less of a 1,300-foot-long pier, a CONSOL spokesman said. It triggered alarms on a coal-loading machine, but it would not be apparent to a casual observer, the spokesman said.
"We're pretty comfortable forecasting we won't lose any shipments," said Tom Hoffman, CONSOL's vice president for external affairs. "The signal we're sending to the market is ... we'll get this fixed and get you your coal."
Part of the impact in Europe is psychological, and that alone may raise prices, a coal company executive said. "Until it fires up again," the official said of the Baltimore terminal, "I think they will be a little nervous."