US coking coal exports to Asia fall sharply in August

US coking coal exports to Asia fall sharply in August

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US coking coal exports declined by nearly 40pc year on year to 2.64mn t in August, driven by a significant fall in shipments to Japan and India, as steel production in these two key US export destinations fell amid the Covid-19 demand slump.

The US exported 108,012t of coking coal to Japan in August, down by 86.4pc compared with the same month last year when Japan accounted for the largest receipts. Japanese crude steel manufacturing was hit by lower global steel demand, forcing many of the country’s mills to idle blast furnaces (BFs) earlier this year. Nippon Steel halted six of its 15 BFs as a result of the slowdown in steel demand, while JFE Steel closed its BF4 in Kurashiki, bringing forward refurbishment work originally planned for 2021, and temporarily closed BF4 in Fukuyama. But with Japanese steel demand recovering in the auto and manufacturing sectors, JFE Steel has since restarted the BF, while Nippon Steel plans to resume operations at its Kimitsu BF2 in late November. Overall demand for steel products in Japan for October-December is projected to fall by 10.1pc to 19.5mn t on the year but rise by 4.1pc from July-September.

US shipments to India totalled 237,432t in August, down by nearly 54pc on the year, as Indian demand for coking coal was similarly hit by reduced demand from steel mills cutting output. Port unloading and inland transportation disruptions linked to Covid-19 further dampened Indian appetite for coking coal. But Indian mills have since largely returned to running at capacity, ramping up output since July, pointing to a recovery in coking coal demand later this year.

Exports to Ukraine experienced a steep decline too — down by 47.2pc on the year to 277,073t — when US coking coal exports to the country surged in the second half of 2019 after Russia placed restrictions on coking coal exports to Ukraine.

Shipments to the Netherlands in August fell by 14.8pc on the year to 363,707t, as steel capacity stayed below normal levels due to weak demand in July and early August. While steel demand has since risen on the back of restocking, which is expected to give overall coking coal consumption a lift, the overall mill utilisation rate is still likely to rise to around 80pc into the first quarter of 2021.

Brazil accounted for the largest share of US coking coal exports in August at 455,219t, but this was still down by 7.6pc on the year, likely as a result of steel production cuts earlier this year. But Brazil remains a bright spot for US miners, with recent tenders from the country’s mills supporting prices in the Atlantic, while BF restarts are continuing to boost the outlook. ArcelorMittal is due to restart Tubarao’s BF3 next week after restarting Tubarao’s BF2 in July, while Usiminas restarted BF1 at the Ipatinga plant in August.

Exports to Turkey fell by 48.2pc in August to 69,105t, as Turkish mills took advantage of lower Australian spot prices, but overall shipments to Turkey from the US have more than doubled to 1.85mn t in the year to date as Turkish mills continued to operate at comparatively high capacities throughout this year.

US coking coal exports in January-August totalled 24.77mn t, down by 24.4pc compared with the same period in 2019, with Japan accounting for the largest decline, down by 52pc to 2.02mn t, followed by the Netherlands with a 35.3pc on the year fall to 2.15mn t, Canada down 26pc to 1.56mn t and Brazil with a 17pc decline to 3.83mn t.

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