US Gulf coal loadings resume after Francine: Update

Market: Coal, Coking coal, Petroleum coke
18/09/24

Updates status of United Bulk Terminals in paragraph 4

Some coal terminals on the US Gulf Coast have resumed operations this week after power was restored following Hurricane Francine.

SunCoke Energy said today that the Convent Marine Terminal in Louisiana returned to full operations on 15 September. The company said last week that the terminal was not damaged but did lose electricity after the hurricane made landfall in the state on 11 September.

Other terminals in the area that handle coal also experienced some power outages from Francine. Kinder Morgan's International Marine Terminals is "currently ramping back up after working through some power and post-storm issues," the company said today. Kinder Morgan also said all of its other terminals are fully operational.

However, a market source on 17 September said that T Parker Host's United Bulk Terminals (UBT) in Davant, Louisiana, is still under force majeure because a barge reportedly sank and blocked the facility's barge terminal after Francine had passed through Louisiana. Prior to the barge incident, the company had expected the terminal to return to full staff on 13 September. T Parker Host did not respond for requests for comment.

Impala Terminals also has not responded to requests on the status of the Burnside terminal in Louisiana.

Vessel tracking information from analytics firm Kpler show operations from all four terminals have at least partially resumed. A total of five oceangoing vessels arrived at Burnside, UBT and Convent between 13 September and today and all but one of them had already been loaded with coal and departed by today.

By Anna Harmon

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02/01/25

Viewpoint: US utilities worry over railcar supply

Washington, 2 January (Argus) — US utilities are concerned that they may not have enough railcars to haul coal in the future as multiple power plants are seeking to remain in operation longer than expected. Power demand is forecast to rise in the coming years because of planned data centers in multiple parts of the country. Many data centers are expected to open before new generation, including natural gas, wind and solar-power units, go into service. A number of utilities want to avert the temporary power shortage by extending the life of coal-fired power plants beyond planned retirement dates. In response, demand is "poised to shift to a slight growth in the need for coal cars", according to railcar expert Richard Kloster, president of Integrity Rail Partners. Longer power plant lives as well as expectations of increased metallurgical coal exports are likely to provide demand for equipment. But the supply of railcars for coal has been slowly shrinking. No new railcars for the coal industry — primarily gondolas or open-top hoppers — have been built in nearly a decade. Utilities and leasing companies have had little interest in ordering new railcars for a shrinking sector. Many existing cars have also been scrapped, particularly during periods of low coal demand and high scrap prices during the last few years. There also are thousands of coal railcars in storage, but those do not really count towards demand, Kloster said. The cost of pulling those cars out of storage and making them service-ready is not necessarily cost effective, he said. About 21pc of North American coal cars were in storage at the beginning of August, up from 15pc in November 2022, according to Association of American Railroads data. In comparison, about 35pc of the coal car fleet was in storage at the start of July 2020, near the height of the Covid-19 pandemic. Possibilities of new construction There is a chance that "in the next 10 years, there will be coal cars built again", because many coal cars in the fleet are nearing 50 years of age, Kloster said. The retirement of many cars means that equipment must be pulled from storage or new units built, driving potential construction. Under Association of American Railroads (AAR) rules, railcars built after June 1974 can only be interchanged with other railroads for 50 years. After that, those cars are generally limited to operating on only one carrier. Some of those older cars may be retired early if they need repairs. Maintenance expenses could cause car owners to take units out of service. Utilities strategize Some utilities are already implementing plans to secure railcars, but others think taking additional steps will be unnecessary, according to railcar expert Darell Luther, chief executive of rail transportation firm Tealinc. The differing views are tied in part to whether utilities are regulated by states or merchant-owned, Luther said. Public utilities need to prove to regulators they can meet generating needs, including having enough coal and railcars. Privately owned operators have more flexibility in terms of contracting for coal and railcars. Several utility rail managers told Argus they do not see the need to take extra steps to secure railcars, confident that they already have plenty or can lease whatever they need in the future. But other utilities said they have taken steps to ensure they have coal cars in the future. Some utilities have purchased single or multiple cars as other generators sell them off. Others are increasingly leasing cars, with one utility saying that having more cars than needed is a cheap way of ensuring future supply. By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Viewpoint: Trade war may upend US coke prospects

31/12/24

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31/12/24

Viewpoint: Trade war may upend US coke prospects

Houston, 31 December (Argus) — A possible renewed and expanded global trade war in president-elect Donald Trump's second term could lead to retaliatory tariffs from the US' major petroleum coke export destinations, pressuring US Gulf coast coke prices and adjusting trade flows. Trump campaigned on plans to impose tariffs of up to 60pc on imports from China , reviving memories of his trade policies in 2018 and 2019 that chilled coke trade with the country. He has also threatened to add 25pc tariffs on imports from Canada and Mexico, and up to 20pc on imports from all other countries. It is far from certain Trump will follow through on all his tariff threats once he does take office, or that they will be as large as he has promised. But if he does, China could repeat its retaliatory response to the prior Trump tariffs. And if other countries join in on those retaliatory measures, US coke exporters could face even more challenging conditions than in the past. First term fight In June 2018, the Trump administration announced plans for a 25pc tariff on what was then $34bn/yr of Chinese imports. Later that month Beijing retaliated, announcing a punitive 25pc tariff on US exports of fuel and calcined coke, thermal and coking coal and many other products. Total tariffs on greater-than-3pc-sulphur green coke, the US' largest grade exported to China, ultimately reached 33pc. The dueling tariffs led to significant shifts in US Gulf high-sulphur coke markets. Green coke exports from the US Gulf coast to China dropped by nearly 60pc year over year in 2018 to 638,000t, according to Global Trade Tracker (GTT) data, as no US Gulf coke shipments loaded for China from July-October. US Gulf export volumes to China stayed nearly flat in 2019 before surging back to 1.8mn in 2020 after China began issuing exemptions for its green coke tariff . US Gulf high-sulphur coke prices also started to fall sharply late in the third quarter of 2018 after China's retaliatory tariff came into effect in late August , while Indian and Turkish demand also fell. The average price of US Gulf 6.5pc sulphur coke dropped significantly in 2019, down by $27/t year over year. US coke exports to other countries were also hurt during that time. Turkey imposed a tariff on US-origin coke imports in 2018 after Trump doubled tariffs on Turkish steel and aluminium imports. US Gulf coke exports to Turkey fell by almost 50pc in 2019 compared with the year prior. Although some analysts think it is unlikely China will retaliate to tariffs as aggressively as it did during the first Trump term, Beijing would likely still target select industries. Coke could be high on this list, as these tariffs are still officially in effect and the government could easily withdraw the exemptions it has issued since 2020. A wider battlefront Trump's threat to issue tariffs against other countries in his second term, including 25pc tariffs on imports from top US trading partners Mexico and Canada, could lead to even more challenges. Already, Canadian prime minister Justin Trudeau and Mexican president Claudia Sheinbaum have indicated that they could retaliate if the US goes through with Trump's plans. While Canada has only taken about 800,000 t/yr of US coke since 2021, Mexico has been a large consumer. The US' southern neighbor has been the fourth-largest offtaker of US Gulf coast coke so far this year. It was the largest in 2018 and 2021 and second-largest in 2019 and 2020, helping to absorb some of the lost demand from China, alongside India, Brazil, Turkey and Italy. India has typically been the biggest offtaker of US Gulf coke in recent years, and it has increased its share of US Gulf exports to 24pc in January-October of this year from 14pc in 2022. This step-up in US coke shipments to India followed a significant drop in China's higher-sulphur fuel coke demand over the past two years, especially since the government began signaling in late May that it would limit its consumption , as well as an increase in Indian cement makers' use of coke in their kilns . While India is likely to absorb even more US Gulf coke if Chinese demand declines further, India already took 20pc more of this coke in 2023 than it did in 2019. This suggests that new buyers may have to come into the market for the potential overhang in next year's US Gulf coast supplies to be worked down. This will only occur if US coke remains at a wide discount to coals from countries like South Africa, Australia and Indonesia in order to encourage more coal consumers to make the switch to coke. If a wider trade war results in India implementing tariffs on US coke, sellers might prefer to sell to other destinations, particularly in the Atlantic basin, rather than discounting coke deeply enough to draw more Indian demand. No help from Europe But while European countries like Italy, Spain, France and Greece were top importers of US Gulf coke in 2018 and 2019 when Chinese demand dropped, these countries are not as well-positioned to absorb more coke now. Cement makers in the region have invested in alternative fuels over the last few years as the EU Emissions Trading System has increased the price of carbon emissions, lowering their overall appetite for fossil fuels. The US exported 31pc less coke to Europe in 2023, at 4.4mn t, than it did in 2018, at 6.4mn t. By Hadley Medlock and Lauren Masterson Top USGC coke export destinations 2017-2020 mn t Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Viewpoint: US coal supply may tighten

31/12/24

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31/12/24

Viewpoint: US coal supply may tighten

Houston, 31 December (Argus) — More US coal production cuts may be on the horizon, setting up thermal coal supply to potentially be lower than demand starting in late 2025. US coal producers have been scaling back mining operations since at least mid-2023 in response to lackluster demand. Market participants are continuing to contend with elevated power plant inventories following relatively mild winters and more competitive natural gas prices. Some producers are signaling more production cuts are coming in the next few months. As a result, the US Energy Information Administration (EIA) recently forecast the country's coal output in 2025 would fall by 7.2pc from this year to 472.3mn short tons (428.5mn metric tonnes), the lowest level in agency data going back to 1949. But US coal-fired generation and coal consumption is expected to grow modestly next year, to 643.7bn kWh and 409.4mn st, respectively, from 641.6bn kWh and 406mn st in 2024, because of greater electricity and industrial demand. Coal consumption for the electric power sector alone is expected to rise to 371.5mn st from an estimated 369.4mn st in 2024, EIA data show. Generators are expected to draw from their existing coal inventories for the majority of the year to meet the slightly higher electricity demand, potentially bringing power plant stockpiles down to more normal levels. Coal producers also are expected to have less inventory at mines and loadout facilities as volumes that had been deferred to 2025 are delivered. If the inventory withdrawals and expected slight increase in domestic consumption are coupled with higher export market prices and demand, "there could be an impetus for a slight ramp-up in domestic production, but currently, that prospect does not appear to be visibly on the horizon", EIA chief economist Jonathan Church said. For example, Argus assessments for calendar year 2025 API 2 coal swaps averaged $112.85/t from 1-24 December, compared with $104.19/t for all of December last year. The response from coal producers to any improvement in demand could be uneven, which could constrict competition and boost prices. While larger producers with longwall mining equipment, primarily in northern Appalachia and the Illinois basin, can somewhat efficiently resume or increase production, other companies may struggle to ramp up operations. Producers also may not have the financial support to increase coal output. A number of market participants expect smaller producers with higher-cost operations to be forced out of business as major banks continue to pull back on lending money to coal mining companies. In the nearer term, recent or planned coal mine closures could further limit supply. Alliance Resource Partners said in November that it intends to retire its central Appalachian coal-producing MC Mining complex in Kentucky, and the company has already cut operations to two of its four production units. Earlier in 2024, American Consolidated Natural Resources closed its Pride Mine in western Kentucky and Hallador Energy idled two small Indiana mines in February. Other producers have scaled back operations but kept mines open. Coal miners worked an average 45.5 hours/wk in October when not adjusted for seasonal factors, preliminary figures from the US Labor Department show. A year earlier, coal miners averaged 48.3 hours/wk. Producers also have to contend with an uncertain outlook beyond 2025, including an expected shift in environmental policies under president-elect Donald Trump, how new data centers will affect electricity demand, and timelines for installing new generation and transmission upgrades. Alliant Energy, Vistra Energy, Duke Energy and Louisville Gas & Electric and Kentucky Utilities are among utilities that recently announced plans to potentially delay retiring coal-fired generating units or plans to remodel coal units to co-fired natural gas and coal to try to meet load growth projections for the next few years. This could keep coal-fired generation and demand at least somewhat stable, but it may not provid long-term support. "To have increased coal demand, you would have to have load growth outpacing new supply," said Robert Godby, associate professor in the economics department at the University of Wyoming. He and others expect new renewable generation and transmission projects to eventually accommodate projected electricity demand growth. Increased load growth will be "at best just a reprieve from the ongoing downward trend in coal production and coal demand", Godby said. As such, producers may continue to try to limit output in 2025, which could partially raise domestic prices from current levels that straddle the line of profitability for many coal mining companies. But the increases will likely be modest as alternative energy sources are expected to continue to suppress demand for coal generation. By Anna Harmon Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Viewpoint: US Supreme Court tees up more energy cases

31/12/24

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31/12/24

Viewpoint: US Supreme Court tees up more energy cases

Washington, 31 December (Argus) — The US Supreme Court is on track for another term that could significantly affect the energy sector, with rulings anticipated in the new year that could narrow environmental reviews and challenge California's authority to set its own tailpipe standards. The Supreme Court earlier this month held arguments in Seven County Infrastructure Coalition v Eagle County, Colorado , a case in which the justices are being asked to decide whether federal rail regulators adequately studied the environmental effects of a proposed 88-mile railway that would transport 80,000 b/d of crude. A lower court last year found the review, prepared under the National Environmental Policy Act (NEPA), should have analyzed how building the project would affect drilling and refining. Business groups want the Supreme Court to issue an expansive ruling that would limit NEPA reviews only to "proximate" effects, such as how rail traffic could affect nearby wildlife, rather than reviewing distance effects. The court recently agreed to hear a separate case that could restrict California's unique authority under the Clean Air Act to issue its own greenhouse gas regulations for newly sold cars and pickup trucks that are more stringent than federal standards. Oil refiners and biofuel producers in that case, Diamond Alternative Energy v EPA , say they should have "standing" to advance a lawsuit challenging those standards — even though they could now show prevailing in the case would change fuel demand — based on the alleged "coercive and predictable effects of regulation on third parties". These two cases, likely to be decided by the end of June, follow on the heels of the court's blockbuster decision in June overturning the decades-old "Chevron deference", a foundation for administration law that had given federal agencies greater flexibility when writing regulations. Last term, the court also limited agency enforcement powers and halted a rule targeting cross-state air pollution sources. This term's cases are unlikely to have as far-reaching consequences for the energy sector as overturning Chevron. But industry officials hope the two pending cases will provide clarity on issues that have been problematic for developers, including the scope of federal environmental reviews and the ability of industry to win legal "standing" to bring lawsuits. Two other cases could have significant effects for the oil sector, if the court agrees to consider them at a conference set for 10 January. Utah has a pending complaint before the court designed to force the US to dispose of 18.5mn acres of "unappropriated" federal land in the state, including oil-producing acreage. Utah argues that indefinitely retaining the land — which covers about a third of Utah — is unconstitutional. In another pending case, Sunoco and other oil companies have asked for a ruling that could halt a series of lawsuits filed against them in state courts for alleged damages from greenhouse gas emissions. President-elect Donald Trump's re-election could create complications for cases pending before the Supreme Court, if the incoming administration adopts new legal positions. Trump plans to nominate John Sauer, who successfully represented Trump in his presidential immunity case, as his solicitor general before the Supreme Court. By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Viewpoint: Policy uncertainty dogs battery anode plans

30/12/24

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30/12/24

Viewpoint: Policy uncertainty dogs battery anode plans

Washington, 30 December (Argus) — Former president Donald Trump's re-election is sparking uncertainty in the US' synthetic graphite battery sector, with companies worried about a possible halt to government finance and a weaker outlook for domestic demand. "With Trump being elected president, everything's up in the air," one industry source said. Battery materials companies expecting to receive government funding to build plants in the US could see their prospects dim with Trump coming into office , since these companies need the federal grants to compete with China, a second source said. Trump on the campaign trail said he would rescind all unspent funds in President Joe Biden's Inflation Reduction Act (IRA) and scrap Environmental Protection Agency tailpipe standards, which he called an electric vehicle (EV) "mandate". The Biden administration is racing to try and secure projects set to be funded by the IRA. On 16 December, US battery materials producer Novonix received a conditional loan for up to $754mn for a new synthetic graphite plant from the US Department of Energy (DOE). If finalised, the loan would be used to build a new 31,500 t/yr synthetic graphite plant in Tennessee by the end of 2028. DOE previously awarded Novonix a $100mn grant and a $103mn tax credit to expand capacity at its Tennessee plant to 40,000 t/yr by 2025 and 150,000 t/yr by 2030. DOE on 16 December also closed on its up to $9.6bn loan to South Korean battery manufacturer SK On for the construction of three battery plants in the US, the largest loan ever awarded under its Advanced Technology Vehicles Manufacturing Program. DOE also in September selected SKI US , part of India-based Birla Carbon, to receive $150mn build a 25,000 t/yr synthetic graphite production plant in South Carolina. Some in Trump's orbit have warned they will review contracts they view as hastily pushed out before the former president takes office . But some Republicans are likely to oppose full repeal of the IRA, since the bill funds projects in their districts. And Republicans will hold a razor-thin majority in the House of Representatives. Even if Republicans do not repeal the IRA or other EV subsidies like tax credits, the uncertainty surrounding the new administration's support could be a stumbling block. "Who's going to put half a billion dollars into a battery plant right now when you don't have certainty on the push for EVs?" the first source said. Battery projects require huge amounts of investment. Swedish battery maker Northvolt obtained record venture capital investment for a European start-up at $15bn. But on 21 November, the company filed for Chapter 11 bankruptcy protection in the US , in part because of difficulties "bridging financing between different stakeholders", outgoing chief executive Peter Carlsson said. The company had already closed down its R&D facility in the US and put plans for factories in Canada, Germany and Sweden on hold. Its financial woes intensified after the Swedish government declined to invest. Other European governments have already reduced financial support for EVs, more for spending reasons than policy, which has softened demand in the region. France recently changed eligibility requirements for subsidies , and Germany ended its subsidy late last year. Some companies, like Norwegian battery materials company Vianode, have been planning multi-billion dollar investment programmes to expand their reach in the automotive industry throughout North America and Europe. It is not clear if Trump's election will have an effect on these plans. Vianode opened its first anode graphite production plant, Via One, in Herøya, Norway, in October. The plant will have a capacity of 2,000 t/yr, enough to supply 30,000 EVs annually, according to Vianode. Chinese firms have scaled up production of key battery materials at all stages of the supply chain, creating more competition for European and US producers. Chinese producers dominate the global EV market with about 70pc of market share, even as the EU and US have put policies in place to try to support their domestic industry. China's lithium-ion battery exports to the US jumped in November as suppliers looked to get ahead of potential new tariffs. The Trump administration is likely to increase tariffs on Chinese lithium-ion batteries to as much as 60pc in the coming few months after Biden earlier this year lifted them to 25pc from 7.5pc. This could help support US-based battery plants. But tariffs on Chinese goods could also present additional challenges, as the raw materials for synthetic graphite often have some Chinese components. Needle coke, traditionally the main raw material for synthetic graphite used in battery anodes, is not widely produced outside of China. And while companies in China have been researching options for using a wider range of petroleum coke qualities , specifications are still relatively narrow, with battery companies in China absorbing most of the world's suitable coke . One graphite anode plant in Europe has been struggling to procure petroleum coke, according to a market participant. Sourcing coke for synthetic graphite in Europe and other ex-China locations is likely challenging, as most of these refineries and calciners have tied up their supply in long-term commitments, one producer said. Refineries are also reducing coke production, as the required feedstocks have become more costly. By Lauren Masterson and Hadley Medlock Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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