7/16/14, "Hungry U.S. Power Plant Turns to Russia for Coal Shipment," Bloomberg, Mario Parker
"When New Hampshire's
largest utility needed to rebuild coal supplies after the past frigid
winter, it turned to Russia rather than Appalachia in the U.S. Northeast
or Wyoming’s Powder River Basin.
Doric Victory, a bulk carrier the length of two football fields,
transported the fuel almost 4,000 miles (6,436 kilometers) from Riga, Latvia, last month to Public Service of New Hampshire’s Schiller power plant in Portsmouth, a 150-megawatt facility that’s produced electricity since 1952.
Utilities in the U.S. are scrambling for coal, on pace to increase imports 26 percent this year, as railroad bottlenecks slow deliveries and electricity demand
climbs with an improving economy. Russia, the world’s third-largest
exporter of the fuel, will boost shipments 3.9 percent to 106 million
metric tons this year, IHS Energy forecasts, part of President Vladimir Putin’s plan to expand Russia’s role in the global coal market.
aware that a number of plants have low stockpiles, so you hear Russian
coal and they say, ‘Oh wow, people must really be desperate,’” James
Stevenson, Houston-based director of North American coal at IHS, said in
a July 8 telephone interview.
The New Hampshire utility
declined to disclose the amount of coal that it purchased from Russia.
U.S. bill of lading data show that 38,500 metric tons of steam coal were
“A shipment of coal was contracted from Russia that met our
operational and economic needs,” was all the utility was willing to say
in an e-mail.
U.S.-Russia relations are at a post-Cold War low after Russia’s annexation of Ukraine’s
Crimea. The U.S. and European Union have imposed sanctions on companies
and individuals tied to Putin’s inner circle and are considering
The Russian fuel appeals to power producers because it emits less
sulfur than other coals, making it easier to comply with environmental
rules, and has a high heat content, meaning it can produce more power
per measure of fuel, Stevenson said.
In 2012, Putin pledged to
spend $120 billion in public and private funds to expand Russia’s coal
mining capacity and boost exports through 2030. The country has the
second-largest reserves behind the U.S., government data show.
Russia's abundant supply of natural gas, also used to generate electricity,
gives it the ability to flood the seaborne coal market, the U.S. Energy
Department says. Exports from Russia have swelled 94 percent from January 2010 through May, data compiled by Bloomberg show.
burned 30 million tons of coal inventories in the first quarter, EIA
data show. March was the coldest for the month since 2002 in the
contiguous 48 U.S. states, according to the National Climatic Data
center, boosting power demand. In spring, an increase in oil and ethanol
transport clogged the railways and slowed efforts by power generators
to rebuild supply.
Some utilities have as little as 20 days of reserves, Bill Davison, vice president of thermal coal sales at Alpha Natural Resources Inc. (ANR), said last month at a conference in New York.
Tennessee Valley Authority
temporarily idled the Bull Run plant in May to rebuild supply, Vince
Stroud, the company’s director of coal origination, said last month in
an interview at the IHS McCloskey Coal USA conference in New York.
Power producers have placed an emphasis on reliability of supply,
whether it’s domestic or imported, as they try to increase inventories
and navigate spotty rail service, said Frank Kolojeski, director of marketing at Exporting Commodities International Inc., a brokerage in Marlton, New Jersey.
lot of companies were reluctant to go out and buy spot coal because
they weren’t sure it would get delivered,” he said in a July 2 telephone
The U.S. imported 34 million tons of coal in 2008, a year in which the fuel accounted for
48 percent of electricity generation, government data show. Foreign
purchases tumbled to 8.9 million tons by last year as coal’s share of
electricity consumption dropped to 39 percent while gas use gained.
Coal buyers, producers and shippers responded to shrinking imports by idling or reallocating equipment, Kolojeski said.
had been used to five years of dormancy,” he said. “All of a sudden
there was a surge in demand. It caught everybody off guard.”
In December days of coal supply fell below 60 days for the first time since summer 2011, according to the Energy Department’s statistical arm.
In the first quarter, the most recent period for which data is
available, U.S. imports ballooned 71 percent to 2.4 million tons, EIA data show.
in the U.S. are finding bargains because the world is currently
oversupplied, Stevenson said. “In some ways the Russian coal was a bird
in the hand,” he said.
Thermal coal is used to generate electricity, while the metallurgical variety is needed to forge steel.
Coal at the Australian port of Newcastle, Asia’s benchmark price, is down about 17 percent this year at $69.65 a metric ton. Coal for delivery next year to Northwest Europe is down 11 percent at $77.50.
On the New York Mercantile Exchange, prices have increased 5.3 percent to $60.50.
global seaborne coal market may rise 4.6 percent this year to 997
million metric tons and could reach a record 1 billion tons, the
Englewood, Colorado-based information company, estimates. Indonesia is the biggest seller of coal, followed by Australia, according to IHS.
accounted for 67 percent and Indonesian coal made up 23 percent of U.S.
imports in the first quarter, according to EIA. In the lower 48 states,
the most foreign shipments have flowed in through Tampa, Florida, followed by Boston, the EIA data show.
you are on the Atlantic Coast, you have a chance to buy imported coal,”
Stevenson said. “If you’re a utility you have to act now and throughout
the second half of the year in case there’s a colder winter than last
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