Cornett's Corner

Reasons Behind the Price Premium for U.S. Metallurgical Coal Exports

Reasons behind the price premium for U.S. metallurgical coal exports annual export prices for U.S. coal

U.S. coal used for the steelmaking process has sold for more than double the price of U.S. coal used as a fuel for electricity generation in six of the last seven years, underscoring a historical trend. U.S. metallurgical coal, used primarily as a raw material in the steelmaking process, historically has sold into export markets at prices higher than those for U.S. thermal coal, a major fuel for electricity generation. From 2001 to 2023, U.S. metallurgical coal sold at an average premium of 90% to the price of thermal coal.

The average price for U.S. metallurgical coal exports rose particularly sharply in 2022 following trade restrictions on coal from Russia—one of the few other major metallurgical coal producers—implemented in the wake of Russia’s full-scale invasion of Ukraine combined with global supply chain disruptions during the same year.

This sustained price divergence illustrates differences in the two major markets served by the U.S. coal industry. Metallurgical coal accounts for approximately 10% of U.S coal output, and nearly all of it is exported. Thermal coal produced in the United States, by contrast, mostly is consumed domestically. Of the estimated 67 million short tons of metallurgical coal produced in the United States in 2023, 76% (51 million short tons) was exported to coke producers and steelmakers around the world, data from our Annual Coal Report and Quarterly Coal Report show. In contrast, the amount of thermal coal exported rarely exceeds 8% of its annual production.

The higher prices for metallurgical coal stem from its unique quality and uses. Metallurgical coal is a low-ash, low-sulfur bituminous coal used in the blast furnace steel manufacturing process once it has been converted into coke. Coke is a strong, dense, and nearly pure carbon residual product that serves as a fuel and reductant when mixed with iron ore and limestone in a blast furnace to produce pig iron. In the final part of the integrated steelmaking process, pig iron is converted into steel by adding oxygen.

Although production of steel using pig iron blast furnaces is only 30% of raw steel production in the United States, its share of global steel output is approximately 70%. U.S. metallurgical coal is in high demand from international pig iron blast furnace steel producers.

Click here for the full article from U.S Energy Information Administration

Heidi

Share
Published by
Heidi

Recent Posts

Body Found in PA Cole Mine

Body Found In PA Mine UNITY TOWNSHIP, Pa. (KDKA) — The body of Elizabeth Pollard,…

6 days ago

Today’s Quote

"Healthy responsibility is defined as taking 100 percent responsibility for yourself while inspiring others to…

6 days ago

Twelve Hour Shifts

Twelve Hours Shifts have been debated for many years as to their pros and cons.…

6 days ago

Hypothermia and Frostbite

Hypothermia and Frostbite Even skin that is protected can be subject to frostbite. It's the…

7 days ago

Safety Tidbits

Safety Tidbits December is Mental Wellness & Holiday Safety Month Tips • Exercise your mind…

7 days ago

Today’s Quote

The Courage of Integrity (anonymous source) "The highest courage is to dare to be yourself…

7 days ago

This website uses cookies.