2012 Expected to be a Record Year for Coal Exports

Coal exports are expected to exceed record levels this year, according to the Energy Information Administration.By the end of the year, the country is expected to have exported 125-133 million tons of coal—which shatters the previous record of 113 million tons set in 1981. This is largely due to a very strong first six months of the year, and the EIA notes that since then, the global demand for American coal has been slightly waning. The global economy has been slowing, especially in China, the world's largest coal consumer by a large margin. As a result, EIA does not expect coal exports to continue at their current pace. Exports in August, the latest data available, reflect some of the weakening global demand for coal, falling 2 million tons from the record June levels. While declines in export levels inject some uncertainty, exports remain elevated with lower August exports still 13% above August 2011 levels. As a result, 2012 is still expected to surpass the 1981 record.What’s really interesting about this data is that exports are up for both thermal coal (used for electricity) and metallurgical coal (used in steel-making). In the past, metallurgical coal has been more in demand as countries like China and India industrialize and need steel. But in 2012, the EIA notes that thermal—or steam—coal accounts for 95 percent of the annualized export increase.The demand for steam coal overseas is good news for Kentucky coal producers, because only the furthest eastern counties have any significant metallurgical coal reserves. (The big Kentucky-India coal deal involves both thermal and metallurgical coal, too, and as I reported yesterday,the first shipment is delayed.) But as the United States moves further away from coal, exporting U.S. reserves to be burned in other countries won’t have the desired effect of slowing global warming.