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USGC Coal Ship Departures Slow Amid Low Mississippi Levels



September 14, 2023 - Gulf Coast coal ship departures fell 57.1% on the week to six coal ships amid declining Mississippi River water levels in the week ended Sept. 10, according to Sept. 12 data from the US Geological Survey and Platts cFlow ship and commodity tracking software from S&P Global Commodity Insights.

Gulf Coast-departing coal ships carried 342,234 dwt in the latest week, down from 751,347 dwt the week before, cFlow data showed. The top three weekly destinations for Gulf Coast-shipped coal were Egypt at 145,672 dwt; Panama, 81,688 dwt; and Japan, 52,113 dwt.

The Mississippi River at Baton Rouge stream gauge Sept. 12 was 5.8 feet above sea level, the same level when Ingram Barge Company declared force majeure last fall, according to USGS data and the barge company's Sept. 30, 2022, force majeure letter. Low water levels can cause the river to become narrower even as a deep draft is maintained for tanker traffic, resulting in barges getting hung up on the sides, the US Army Corps of Engineers told S&P Global in 2022.

Barges of coal mined in the Illinois Basin are transported downstream on the Mississippi River to ports near the Gulf destined for export markets. In 2022, domestic ILB 11,500 Btu/lb coal prices tumbled in the weeks after Illinois Basin coal disconnected from global markets amid low Mississippi River water levels, according to the Platts assessments by S&P Global Commodity Insights. But export markets were significantly more bullish in the year-ago month, and water levels were higher on the upper Mississippi River system near St. Louis, a hub for domestic coal barge traffic. St. Louis barge loading drafts were 15% below normal capacity on Sept. 11, the American Commercial Barge Line said.

FOB New Orleans 6,000 kcal/kg NAR coal for 15- to 60-day loading rose 50 cents on the session to $84/mt, according to the Sept. 12 Platts assessment by S&P Global Commodity Insights. The FOB NOLA coal price has been rangebound between $74.50/mt to $85.23/mt over the past 39 sessions.

"Some coal customers use multiple ports so if an East Coast customer also runs coal out of the Gulf, we may end up getting more cargoes coming to the East Coast if there's a problem [in the Gulf]," a US terminal operator told S&P Global Aug. 23. "It's customer by customer because you have to have a spot at a terminal to use and if our space is already taken up, I can't create a new contract. Yet if a customer has space with me, they can run more tons if they can physically do that with railroads or barges."

West Coast and Atlantic Coast coal ship departures each increased about 60% on the week amid reduced Gulf Coast activity, cFlow data showed.

Weekly departures from the Atlantic Coast rose to 16 coal ships carrying one million dwt, up from 10 coal ships carrying 611,516 dwt in the previous week. The top three weekly destinations for Atlantic Coast-shipped coal were Gibraltar – a bunkering point for vessels en route to India – at 325,233 dwt; Brazil, 159,996 dwt; and the Netherlands, 138,805 dwt.

Platts Sept. 12 assessed FOB Baltimore 6,900 kcal/kg NAR coal for 15- to 60-day loading up 50 cents on the session at $88/mt, based on market fundamentals and broker indications of value at $86/mt and $88/mt, tested in the market through 11:30 am ET. The FOB Baltimore 6,900 kcal/kg NAR price has been rangebound between $80/mt to $90/mt over the past 27 sessions.

West Coast departures climbed to a seven-week high of five coal ships. West Coast coal ships carried 230,376 dwt, up from 149,514 dwt the week before. West Coast coal shipments were bound for Japan at 116,297 dwt; South Korea, 81,756 dwt; and China, 32,323 dwt.