Data from the US Census Bureau shows that US exports of thermal coal go mainly to India, the main market for this fuel. However, Indian buyers in the industrial sector, particularly in the cement and brick manufacturing segments, are increasingly turning to the more competitive domestic petroleum coke. As a result, the Northern Appalachian Basin (NAPP) FOB Baltimore coal price fell 70 cents, reaching $73.95/mt as of October 1. This dynamic reflects a global market saturated by oversupply, exacerbated by falling demand in India.
This comes with increased pressure on US coal stocks, which stood at 125.7 million tonnes in July, 15.8% above the five-year average. The supply glut is reducing margins for U.S. producers, making any strike-related logistical disruption ineffective in boosting prices.
Prices under pressure
Recent price fluctuations in the markets reflect this structural trend. Central Appalachian Coal (CAPP) averaged $72.24/st for the first nine months of 2024, compared to $84/st for the same period in 2023. Additionally, the latest data from Energy Information Administration (EIA) confirm that coal stocks in the energy sector have exceeded the five-year average since May 2023. This abundance of domestic resources puts producers in an unfavorable position to meet fluctuating demand from Asian markets.
The US-based coal broker, interviewed by Commodity Insights, says “the strike is unlikely to have a direct impact on the domestic market”, emphasizing that current prices are driven more by global market fundamentals rather than by local disturbances.
An unbalanced global market
Excess coal production capacity is not limited to the United States. Other major global producers, such as Australia and Indonesia, continue to supply high volumes, fueling competition in Asian markets. As a result, major destinations for U.S. coal, such as China and India, are seeing a diversification of their supply sources, further limiting the ability of U.S. producers to adjust prices to their advantage.
Export volumes from U.S. ports totaled approximately 99.7 million tons in 2023, generating $15.4 billion in revenue, according to the National Mining Association (NMA). A prolonged strike could potentially reduce exports by 85 to 90 percent, resulting in an estimated $13 billion in lost revenue. However, even with this potential reduction, excess global momentum prevents any lasting support for coal prices.
Implications beyond coal
The effects of the dockers’ strike could extend to other sectors, notably metals and chemicals, which also depend on port infrastructure affected by the social movement. Although West Coast ports are not directly affected, their limited capacity cannot compensate for volumes transiting through the East and Gulf Coasts. Additionally, the additional transportation costs associated with a possible bypass make this option unviable for coal shipments to Asian markets.
Industry analysts stress that the market’s ability to absorb these disruptions remains limited, particularly in an environment where global demand continues to weaken. Therefore, any major disruption to U.S. shipments is likely to burden producers more than buyers, who have multiple supply alternatives.
In conclusion, the American dockers’ strike, although it may cause short-term disruptions, does not succeed in supporting coal prices in a structurally unbalanced market facing stagnant demand.
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