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February 16, 2011

U.S. exports of coking coal were nearly triple U.S. consumption in 2010

Exports of coking coal & used in steelmaking & rose to an estimated 55 million tons in 2010, up from the low of 22 million tons in 2002 and the highest level since 1991. The 2010 export level is nearly three times the consumption of coking coal at U.S. coke plants, according to the Short-Term Energy Outlook (STEO).

Brazil remained the largest buyer of exported U.S. coking coal in 2010. Compared to 2009, exports of U.S. coking coal increased significantly to the Netherlands, Poland, Turkey, Ukraine, China, India, Japan, and South Korea during 2010.

Substantial steel production growth in developing countries, combined with international coal supply shortages (mainly due to weather and transportation bottlenecks in other coal exporting countries), fostered the growth in U.S. coking coal exports in recent years. China only began importing coking coal in sizable quantities in 2009 when its total imports from all countries jumped to 39 million tons from 2 million tons in 2008. SSY Consultancy & Research Ltd, a shipping company that tracks seaborne coal imports and exports, expects final 2010 data to show record levels and year-over-year growth for international coking coal trade1. Many steel-producing countries edged toward economic recovery during the year, and China&s crude steel production continued to set records.

At coke plants, coking coal undergoes a transformation to produce coke that is subsequently consumed in blast furnaces to produce pig iron & part of the traditional steelmaking process. Steel production in developing countries & who rely primarily on the coking coal-pig iron-steelmaking process & grew rapidly in the last decade; for instance, China&s pig iron production alone in 2010 is higher than total world pig iron production in 2001. In contrast, in the United States, consumption of coking coal at coke plants fell through 2010 as U.S. pig iron production declined.

The United States consumed less coking coal domestically due in part to the continued adoption of technologies such as electric arc furnace (EAF) technology, an alternative steelmaking process. EAF technology recycles scrap steel and does not require coking coal. Its share of crude steel production has been rising; in 2002, 50% of U.S. crude steel production used the EAF process, but in 2008 & which had similar levels of crude steel production as 2002 & EAF accounted for 58% of total production.

Low levels of U.S. coking coal consumption in 2009 and 2010 were also partly attributed to the recent economic downturn; the February 2011 STEO forecasts a slight increase in U.S. coking coal consumption and an increase in coking coal exports in 2011, based on the assumption of improved economic performance and continued strength in international demand, respectively.

1 SSY Consultancy and Research, Ltd., SSY&S Coal Trade Forecast, Vol. 19, No. 1 (London, United Kingdom, October 2010).