Beijing mulls allocating extra 2020 coal import quotas

Market: Coal
24/11/20

Chinese authorities may allocate an additional 20mn t of coal import quotas for this year, according to multiple market participants, to help cope with firmer winter demand and higher domestic prices.

The fresh allocation has not been confirmed by customs authorities but several utilities have started to buy imported cargoes for arrival at Chinese ports before the end of December.

Utilities in east China's Jiangsu province — including plants operated by state-owned utilities Huadian, Guodian and Guoxin — have bought a number of Indonesian cargoes for late November and December delivery. Of the total 20mn t of fresh quotas, 1.7mn-2mn t is likely to be allocated to east China's Jiangsu province, market participants told Argus. The utilities may receive confirmation that the additional quotas will be available soon, they said.

It is uncertain whether the cargoes will be able to be cleared when they arrive, other market participants said. But if not they can wait to be cleared in January when 2021 import quotas will be made available.

The additional quotas will be to cope with peak winter demand and higher domestic coal prices. Domestic NAR 5,500 kcal/kg coal surged to $93.40/t on 20 November, up from $79.88/t on 14 August, according to Argus' assessments.

A number of Chinese regions have exhausted their 2020 import quotas over the past several months, resulting in buyers reducing purchases of seaborne coal.

China's coal imports fell to a 10-month low of 13.73mn t in October, which was down by 47pc compared with the same month last year, customs data show. Chinese imports reached 253.16mn t during January-October, down by 8.3pc from the same period last year and just 46.51mn t short of 2019's annual imports of 299.67mn t.

Purchases by utilities in Jiangsu have lifted prices of Indonesian coal in recent weeks. A utility based in east China's Shanghai municipality bought two Panamax cargoes of NAR 3,800 kcal/kg (GAR 4,200 kcal/kg) Indonesian coal last weekend for December delivery on a cfr basis, which nets back to $30.50-31/t fob. Other supramax cargoes of NAR 3,800 kcal/kg coal were offered as high as $33/t fob for December or January loading.

China's domestic coal market has continued to edge higher this week, despite the potential new quotas for coastal utilities. Bids for NAR 5,500 kcal/kg coal were around 614-616 yuan/t fob ports in north China today, while offers were at Yn618-620/t. Argus last assessed this market at Yn614.42/t fob Qinhuangdao on 20 November.

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02/01/25

US oil sector sues Vermont over new climate law

Washington, 2 January (Argus) — Oil industry and business groups are challenging a first-of-its-kind law in Vermont that would require fossil fuel producers to pay potentially billions of dollars in fines based on greenhouse gas emissions over the past 30 years. Vermont's law is "unprecedented" and attempts to "pin blame" on a narrow set of out-of-state energy producers for climate-related damages for decades of alleged greenhouse gas emissions, the American Petroleum Institute and the US Chamber of Commerce wrote in a lawsuit filed on 30 December. They argue the law is preempted by the federal Clean Air Act and violates the US Constitution's ban on excessive fines. "It punishes covered energy producers for greenhouse gas emissions related to the lawful production and use of their products and those emissions' purported impacts on climate change," the lawsuit said. Vermont's "Climate Superfund Act" was enacted last year and applies to oil, natural gas and coal producers and refineries found to have emitted at least 1bn metric tonnes (t) of greenhouse gases from 1995-2024. Under the law, Vermont will issue a "cost recovery demand" to those companies based on their emissions that will pay for climate adaptation projects. Vermont will have until 1 January 2027 to finalize specifics of how the program will work, including how to calculate the charge. The lawsuit, filed in a federal district court in Vermont, argues the state had exceeded its authority by trying to impose financial penalties on fossil fuel companies located "well beyond" its borders. The law also imposes an "overly harsh and oppressive retroactive penalty" and is based on an "arbitrary" calculation that focuses on the last 30 years of emissions, the lawsuit argues. Vermont governor Phil Scott (R), who allowed the law to take effect last summer without his signature, has raised concerns about the state's "go-it-alone" approach toward taking on "Big Oil". But New York governor Kathy Hochul (D) last week signed the state's own climate "Superfund" law, which is expected to raise $75bn over the next 25 years from fees on companies that exceed 1bn t of greenhouse gas emissions from 2000-2018. Massachusetts and Maryland are considering similar laws. By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Viewpoint: US utilities worry over railcar supply

02/01/25

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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: 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. 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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

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Australia’s BCC sells more coal in October-December

27/12/24

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27/12/24

Australia’s BCC sells more coal in October-December

Sydney, 27 December (Argus) — Australian coal miner Bowen Coking Coal (BCC) sold 544,000t of coal over October-December, up by 8pc from the same time last year. BCC does not exclusively produce coking coal, despite its name. The company sold 261,000t of non-coking coal over the last three months, accounting for 48pc of its total sales. BCC processes its coal at a handling and preparation plant attached to the Burton Mine Complex. The company used 92pc of the site's current available processing capacity over October-November. BCC moves coal overseas through the Dalrymple Bay Coal Terminal. Exports from the coal hub have been volatile over recent months, growing by 8.8pc on the year in October , before plunging by 13pc on the year in November. Chinese electricity producers bought 7.5mn t of thermal coal from Australian producers in November , 24pc more than the same period last year, in preparation for increased winter power demand. Chinese steelmakers also started preparing to boost production in October, importing 1.3mn t of coking coal over the month, up from 425,000t a year earlier. The country's crude steel exports jumped by 16pc on the year in November. By Avinash Govind Bowen Coking Coal sales kt Type Oct-Dec '24 Oct-Dec '23 Jul-Sep '24 Jul-Sep '23 ROM Coal Production 544* 785.2 768.8 640.3 Sales 544.0 505.0 414.8 554.8 Source: BCC * Oct-Nov '24 production Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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