CONSOL Energy No Longer Using Xcoal as Exclusive Export Marketer
By Tyler Godwin and Andrew Moore
June 12, 2020 - CONSOL Energy has booked three coal cargoes for third-quarter loading dates directly without going through Xcoal, its exclusive export marketer, sources have told S&P Global Platts.
A trader confirmed the deal was done without Xcoal, though he noted that as of June 11, freight had yet to be booked.
"This isn't the first time CONSOL has gone around Xcoal," said the trader. "I don't believe there are [incurable] issues. They have worked out issues in the past."
A broker earlier in June reported to Platts deals for the three capesize ships, of roughly 130,000 mt each, for 6,900/kg coal in the high $50s/mt FOB Baltimore. The ships are expected to be loaded with CONSOL's coal in July, August and September, the broker said.
The bookings by CONSOL come despite its two-year exclusive contract with Xcoal to sell its product internationally, set to expire at the end of this year, as disclosed in a May 2019 report from the Maryland Port Commission.
A CONSOL spokesman declined comment June 11, while phone calls and emails to Xcoal were not returned.
Canonsburg, Pennsylvania-based Consol owns the Consol Marine Terminal in Baltimore, which has an annual throughput capacity of 16 million tons. The company has a full capacity take-or-pay contract there that yields approximately $15 million in quarterly terminal revenue.
The export contract with Xcoal, based in nearby Latrobe, Pennsylvania, was originally signed in Q1 2018 for 14 million tons of shipments from Q2 2018 through Q2 2020 worth over $600 million, CONSOL had earlier announced. The volume was comprised of approximately 70% thermal and 30% crossover metallurgical coal and had an average floor price that was higher than the company's average 2017 revenue of $45.52/ton, it said.
Export Contract Extended to December
In Q1 2019, CONSOL extended the take-or-pay contract by six months to the end of 2020 under the existing tonnage to improve its contracted position for 2020 and to lock in in a strong export position, which, at the time, accounted for over 25% of its anticipated sales volume for the year, CEO Jimmy Brock said on an earnings call in May 2019.
Brock later said on a February 2020 earnings call that CONSOL's relationship with Xcoal was very solid and noted that they like the take-or-pay contract because of the steady revenue.
"[Xcoal CEO Ernie Thrasher] has been able to deliver," Brock said. "He has a very good visibility of what's going on globally, and we're satisfied with where we are today with the contract."
In May, Brock announced that Xcoal had won a one-year contract to supply 1.8 million mt to the Punta Catalina power plant in the Dominican Republic, which all of it is expected to be CONSOL's coal. As a result, Xcoal increased the volume of tons to be acquired under a supply contract with CONSOL, which bumped its contracted export tons over 10 million mt in 2020.
According to cFlow, Platts' trade flow software, three coal vessels have arrived at the Punta Catalina plant from Baltimore with a combined dead-weight tonnage of 215,279 dwt. The last ship, CSL Argosy, arrived in the Dominican Republic on June 8, according to cFlow.
Consol's chief commercial officer, Jim McCaffrey, also said in May that the company had started light discussions on its contract with Xcoal.
"We expect to get heavy into that a little bit later in the year when we get some sort of certainty coming back to us once we get out of this pandemic situation," McCaffrey said.