The closure of all coal mines in Pennsylvania by the state government as of 8pm local time on 20 March until further notice, in an attempt to control the spread of the coronavirus, has the potential to remove a large volume of coking coal from the market.
Major coal miners in the state include Contura Energy, Corsa Coal, Consol Energy and Rosebud, which supply South America, Europe and Asia, in addition to the domestic US market.
Corsa will shut its Acosta, Horning, Schrock Run and Schrock Run extension operations with 690,000-780,000 st/yr capacity. Contura shipped 700,000st of coking coal in 2018 but has idled its Cumberland mine in Pennsylvania since November last year. Consol produced 27.3mn st last year at its Pennsylvania Mining Complex.
Steel mills and metal production have been excluded from the closures in the state, along with oil and gas extraction. But all construction activity in Pennsylvania came under the closure.
The mine closures will have an impact on European mills that are already considering the prospect of potential mine closures in Australia if the virus outbreak in the country worsens.
"While weather conditions in Queensland have stabilised in the last week, booking long-haul shipments from Australia to Europe is risky under current circumstances," said one European trader.
The expectation of reduced hot metal demand in Europe from a string of cuts announced by automakers this week due to coronavirus-related market decline has led to corresponding steel capacity cuts and expectations of reduced raw material demand. Steelmaker ArcelorMittal declared force majeure on raw materials supplied to its European steel mills earlier this week. The company today revealed plans to idle blast furnace three at its Bremen site, which was only restarted in January after an extended repair, and to close a blast furnace each at its Fos-sur-Mer and Dunkirk plants, market sources told Argus yesterday. These closures follow from previous announcements of its cutting of output in Spain](https://direct.argusmedia.com/newsandanalysis/article/2088491) and Italy.
At the same time, shutting down a mill's coke oven is a more drastic step that most steel producers will try to avoid as much as possible, due to the high costs of restarting.
"Still there might be some near-term upside for miners not affected by these closures in Pennsylvania," said a US miner.
US coking coal prices have yet to experience the recovery the Australian coking coal prices have seen since January, on the back of increased demand from China. The Argus assessed premium low-volatile coal price has risen to $163/t fob Australia today from last September's low of $129/t. The US high-vol A price was at $138/t fob Hampton Roads yesterday, up from last year's lowest of $128/t in December.
West Virginia, another major coal-producing state, has just five confirmed cases as of the 19 March, compared to over 180 in Pennsylvania, and the state has not announced similar plans for coal mine closures.
