October 2, 2024 - The International Longshoremen's Association strike, declared Oct. 1 at US East and Gulf coast ports is not likely to support spot thermal coal prices due to a preexisting supply glut, according to a S&P Global Commodity Insights market survey.

"I believe even if the strike has a very good hold in US loading, if disturbance is happening, still I don't see any price support or upward price movement in (Northern Appalachia) or (Illinois Basin) coal because, simply, there is no demand," an India-based trader of US export coal told Commodity Insights Oct. 1.

India is the primary destination for US coal exports, according to US Census Bureau data. Thermal coal mined in the US is typically shipped to India from ports on the East Coast and Gulf Coast—the same loading locations affected by the dockworker strike.

There is currently a glut of NAPP coal in the Indian market, however, as buyers in the cement- and brick-manufacturing segments are increasingly using domestic petroleum coke because it's cheaper, the trader said. Domestic petcoke producers in India recently cut their prices, further eroding Indian demand for US coal exports.

Platts, a part of Commodity Insights, assessed FOB Baltimore 6,900 kcal/kg NAR coal at $73.95/mt Oct. 1, down 70 cents from Sept. 30. The assessment was based on market fundamentals, a bid reported by a trader at $68/mt, and an offer a trader reported at $74-$76/mt. The assessment was also based on a trader indication of value at $70/mt, and broker indications of value at $74.50/mt and $75/mt, tested in the market through 11:30 am ET.

"[The global coal] market is oversupplied today from all the producers and exporters of coal around the world against the very low, very slow, and the no demand coming from major markets like China and India," the trader said.

It was not clear whether the strike could interfere with coal midstreaming, or loading from private terminals, if the workers there aren't part of the union. US West Coast ports aren't affected by the ILA strike because West Coast dockworkers hammered out a six-year contract last year, but West Coast coal port capacity is limited, and transportation costs would make rerouting East or Gulf coast coal cargoes there uneconomical.

A dockworker strike was not expected to lend support to domestic US coal prices either, a US-based coal broker told Commodity Insights Sept. 30.

"If coal cannot be exported, then it is a force majeure situation," the broker said. "Utilities won't step in for coal due to their own lack of demand. Might create a need for suppliers to dump coal."

US electric power sector coal stockpiles were 15.8% above the prior five-year average at 125.7 million st in July, the most recent month reported by the US Energy Information Administration. Above-average utility coal supply has put pressure on US over-the-counter coal prices throughout 2024, according to Platts assessments. US power sector coal stocks have exceeded the five-year average since May 2023, EIA data showed.

Prompt-month Central Appalachia 12,500 Btu/lb CSX rail coal prices averaged $72.24/st through the first nine months of 2024, compared with $84/st during the corresponding period in 2023. Platts assessed November-delivered CAPP 12,500 Btu/lb rail coal at $73.50/st Sept. 30, flat with the previous session.

"I think that. in the bigger picture, coal is the least of the country's worries. The overall impact to the US economy is more of a concern than coal shippers," the broker said.

A strike at US East Coast and Gulf Coast ports could reduce coal exports by about 85%-90%, since most coal shipments go through these ports, the National Mining Association previously told Commodity Insights. "Imports would also take a hit, which would be significant for many non-coal commodities."

Coal exports from all US ports totaled about 99.7 million st and generated roughly $15.4 billion in total revenue in 2023, according to the NMA. "Taking out 85% of exports would be about $13 billion," it added.