March 14, 2024 - The fourth quarter of 2023 brought a surge in U.S. coal exports and there are promising signs the robust market for U.S. coal will continue.

Total 2023 Q4 exports surged 25% year-over-year compared with 2022, according to S&P Global. The surge in exports was led by cargoes to India where the volume of imported U.S. coal doubled, grabbing nearly a third of U.S. export volumes. While exports to Europe retreated from their highs in 2022 during the scramble to replace Russian energy, exports to China, Morocco and Turkey also increased to close out 2023.

For the year, coal exports rose 17.7% from 2022 to 90.5 million metric tons in 2023. Of that volume, 51.4% was metallurgical coal and 48.6% was thermal coal.

Rising U.S. export cargoes reflect rising global coal demand. Global coal use hit an all-time high in 2023, surpassing 8.5 billion tons for the first time, on the back of strong demand in emerging and developing countries and in China. And there are no signs of a coming slowdown. The International Energy Agency expects coal consumption in India and Southeast Asia to “grow significantly.”

For all the attention given to China’s prominence in coal markets as the world’s largest producer and user, and Beijing’s plans to rapidly expand China’s coal generating capacity as an energy security and reliability backstop, coal’s irreplaceable role in India is increasingly coming into focus.

Despite ambitious efforts to rapidly scale renewable energy, India continues to lean on coal generation to meet 75% of its power needs. And there are 85 GW of new coal generating capacity already under construction with more expected.

Indian coal demand is likely to surge. Annual demand is already 1.23 billion tons, met with 964 million tons of domestic production and 266 million tons of imports. Forecasts see annual demand jumping to 1.5 billion tons by 2030 and potentially hitting 1.9 billion tons. Adding 300 million tons of new coal demand – the low-end of forecasts – is equivalent to the entire coal demand of Germany.

While India is aiming to ramp up domestic coal production, imports are expected to grow, with U.S. coal likely to play a very prominent role. Along with meeting growing demand, India is also likely going to need to replace imports of Russian coal. New U.S. sanctions on Russia, which include Russia’s payment system, financial institutions and energy production, may force a quick pivot for Indian buyers.

For India, and numerous other nations trying to keep up with surging electricity demand and backstop energy security, coal is the foundational piece of their energy strategy. Secure, reliable and responsibly produced American coal is increasingly a centerpiece of that effort.