Coal Prices Surge Amid Concerns Over Supply Disruption

Coal prices continue to surge, marking an increase for four consecutive trading days. The rise is fueled by concerns over reduced supply following the collapse of a bridge in Baltimore, United States (US).

According to data from Refinitiv on Thursday (March 28, 2024), the price of ICE Newcastle coal for April contracts closed at US$132 per ton, up by 0.69%.

This increase extends the coal price rally, strengthening for four consecutive days with a cumulative gain of 6.02%.

The primary driver behind the coal price hike is concerns over reduced supply from the US after the collapse of the Francis Scott Key Bridge in Baltimore, US.

As reported, the Francis Scott Key Bridge in Baltimore collapsed on Tuesday (March 26, 2024), following a collision with a giant cargo ship. The bridge collapse is feared to disrupt coal shipments from the US, which is one of the world's largest exporters.

According to Reuters, several coal companies have reported disrupted shipments, with potential delays.

Data from the Energy Information Administration (EIA) shows that the Port of Baltimore is the second-largest coal export hub in the US, contributing 28% of coal exports. It is second only to the port of Norfolk, Virginia, or Hampton Roads.

The average coal exports from Baltimore reached 20 million short tons (18.14 million metric tons) per year during the period of 2021-2023. Exports in 2023 even reached 28 million short tons or 25.4 million metric tons.

Several giant coal companies are located in Baltimore, including CSX. The company owns the Curtis Bay coal dock in Baltimore, located near the Francis Scott Key Bridge.

Similarly, coal producer CONSOL Energy stated that ship access to its terminal at the Port of Baltimore has also been delayed.

Meanwhile, Business Standard suggests that the bridge collapse in Baltimore may likely shut down coal exports at the port for six weeks, as stated by Ernie Thrasher, CEO of Xcoal Energy & Resources LLC.

"You will see some diversion to other ports, but the other ports are quite busy. There is a limit to how much you can divert," Thrasher explained.

However, Thrasher stated that this incident may only have a minor impact on global prices. Still, India may be most affected as it relies heavily on imported coal for power generation.

"Some disruption or chaos from a supply chain perspective will occur," Thrasher noted. "But the bigger question is the impact on India rather than the global impact."

On the other hand, Energy Aspects believes that maritime traffic in Baltimore may be disrupted for a maximum of two to three weeks. Some coal shipments may temporarily be redirected to other ports like Norfolk, Virginia.

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