Data from the U.S. Census Bureau shows that U.S. thermal coal exports are mainly directed toward India, the primary market for this commodity. However, Indian buyers in the industrial sector, notably in the cement and brick manufacturing segments, are increasingly turning to domestically produced petroleum coke, which is more cost-effective. Consequently, the price of Northern Appalachia (NAPP) FOB Baltimore coal dropped by 70 cents to $73.95/mt on October 1st. This trend reflects a global market saturated by an oversupply, worsened by declining demand in India.
This situation is putting increased pressure on U.S. coal stockpiles, which stood at 125.7 million tons in July—15.8% above the five-year average. The oversupply has been eroding U.S. producers’ margins, making any logistical disruptions linked to the strike ineffective in supporting prices.
Prices Under Pressure
Recent price fluctuations reflect this structural trend. Central Appalachia (CAPP) coal averaged $72.24/st over the first nine months of 2024, compared to $84/st during the same period in 2023. Additionally, the latest data from the Energy Information Administration (EIA) confirms that coal stockpiles in the energy sector have exceeded the five-year average since May 2023. This abundance of domestic resources places producers in a challenging position to respond to the fluctuating demands of Asian markets.
A U.S.-based coal broker interviewed by Commodity Insights affirmed that “the strike is unlikely to have a direct impact on the domestic market,” emphasizing that current prices are dictated more by global market fundamentals than by local disruptions.
A Global Market Imbalance
The overcapacity issue is not limited to the U.S. Other major global producers, such as Australia and Indonesia, continue to supply high volumes, increasing competition in Asian markets. Consequently, key destinations for U.S. coal, such as China and India, are diversifying their sources, further limiting the ability of U.S. producers to adjust prices in their favor.
U.S. coal exports from all ports totaled approximately 99.7 million tons in 2023, generating $15.4 billion in revenue, according to the National Mining Association (NMA). A prolonged strike could potentially reduce exports by 85-90%, leading to an estimated revenue loss of $13 billion. However, despite this potential decline, the global oversupply dynamic prevents any sustainable support for coal prices.
Implications Beyond Coal
The effects of the dockworkers’ strike could extend to other sectors, notably metals and chemicals, which also rely on the affected port infrastructure. Although the West Coast ports are not directly impacted, their limited capacity cannot compensate for the volumes transiting through the East and Gulf Coasts. Furthermore, the additional transportation costs associated with any potential rerouting make this option unviable for coal shipments to Asian markets.
Industry analysts point out that the market’s ability to absorb these disruptions remains limited, especially in an environment where global demand continues to weaken. Therefore, any major interruptions in U.S. shipments are more likely to weigh on producers than on buyers, who have multiple alternative supply sources.
Ultimately, while the U.S. dockworkers’ strike may cause short-term disruptions, it fails to support coal prices in a structurally imbalanced market facing stagnating demand.
