Lowering trans-Atlantic cargo volumes
Dry bulk Panamax freight rates from the US East Coast into UK Continent are falling because uncompetitive US thermal coal prices mean European buyers are looking to alternative suppliers, lowering trans-Atlantic cargo volumes, sources said.
A UK-based shipbroker trader said coal volumes from the US to the Amsterdam-Rotterdam-Antwerp trading hub are very low and the coal being shipped is based on sales which were agreed last year, with few fresh sales reported.
The cost of freight to transport a 70,000 mt coal stem from Hampton Roads, Virginia to Rotterdam hit a one-year low of $7.75/mt on January 12. This compares with a 2014 average of $9.95/mt.
The low rates reflect the lack of demand from European thermal coal buyers, which means that excess Panamax tonnage is building up in the North Atlantic, sources said.
According to a short-term outlook from the US Energy Information Administration in January, total coal exports (metallurgical and thermal) were estimated at 98 million st in 2014, a 17.1% fall from 2013.
EIA attributed this fall to slowing world coal demand growth, lower international coal prices, and rising coal output in other coal-exporting countries.
EIA expects that in 2015 US coal exports will fall to 83 million st, which would be the lowest since 2010.