The coal market continues its rapid surge, marking increases for four consecutive trading days. This surge is fueled by concerns over reduced supply following the collapse of a bridge in Baltimore, United States.
According to data from Refinitiv on Thursday's trading (March 28, 2024), the price of ICE Newcastle coal contracts for April closed at $132 per ton, up by 0.69%.
This increase extends the coal price rally, with gains over four consecutive days totaling 6.02%.
The primary driver behind the coal price hike is the concern over reduced supply from the United States following the collapse of the bridge at the Port of Baltimore.
As reported, the Francis Scott Key Bridge in Baltimore collapsed on Tuesday (March 26, 2024) after being struck by a giant cargo ship. The collapse of the bridge is feared to disrupt coal shipments from the U.S., which is one of the world's largest exporters of coal.
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 U.S., accounting for 28% of exports. It trails only the port of Norfolk, Virginia, also known as 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. In 2023, exports even reached 28 million short tons or 25.4 million metric tons.
Several major companies are located in Baltimore, including CSX. The company operates the Curtis Bay coal pier in Baltimore, which is near the location of the collapsed Francis Scott Key Bridge.
Similarly, coal producer CONSOL Energy has a marine export terminal in the Port of Baltimore, stating that access for ships to enter and leave the terminal has been delayed.
Meanwhile, Business Standard suggests that the collapse of the bridge in Baltimore is likely to shut down coal exports at the port for up to six weeks. This was 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," Thrasher said.
"There is a limit to how much you can divert," he explained.
Although, Thrasher mentioned that this incident may only have a minor impact on global prices. However, India might be most affected because of the average coal that exits for power plants.
"Some disruption or chaos from a supply chain perspective will occur," Thrasher said.
"But the bigger question is its impact on India greater than the global impact," he explained.
On the other hand, Energy Aspects notes that maritime traffic in Baltimore may be disrupted for up to two or three weeks. Some coal shipments may be temporarily diverted to other ports such as Norfolk, Virginia.
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