Coal exports' weak start locally could signal trendMay 11 - McClatchy-Tribune Content Agency, LLC - Robert McCabe The Virginian-Pilot
Kerplunk. For the first four months of 2015, coal exports from Hampton Roads, North America's largest coal-exporting port, dropped by nearly a third, year-over-year. The port's three big coal terminals -- Norfolk Southern Corp.'s Pier 6 terminal at Lamberts Point and Kinder Morgan's Pier IX and Dominion Terminal Associates in Newport News -- exported 11 million tons from January through April, according to data from T. Parker Host, a Norfolk-based shipping agent. That was down from 16.2 million tons in the same period a year ago, a 32 percent drop. Annualized, the 11 million figure would translate to 33.1 million tons, a 19 percent drop from last year, wrote Jim Thompson, director of North American coal for a unit of IHS, a Colorado-based global information company, in a May 4 industry report. "Hampton Roads is on track to lose this year 8 million tons of export volume, and virtually all of that will come from the pockets of Central Appalachian producers," Thompson added. Historically, the Central Appalachian region, which encompasses parts of Kentucky, West Virginia and western Virginia, has been the prime source of coal shipped from Hampton Roads. It is hauled here by Norfolk Southern and CSX Corp., two of the nation's biggest railroads. Central Appalachian coal is regarded as among the highest-quality available, but it's also more expensive to mine and, because of that, has trouble competing in the world market, Thompson has said. "I think it's a cyclical thing," said David Host, chairman and CEO of T. Parker Host, whose business largely revolves around helping coal ships get into and out of the port. Export statistics from 1936 through last year show peaks and troughs, typically driven by global factors. Just two years ago, the port handled nearly 50 million tons of coal, the biggest volume since the early 1990s. Though it's unclear whether those numbers will return, volumes will rebound, Host said. "In two to three years, we will see moderate growth in exports," he said. Meanwhile, the impacts are being felt. Weakness in Norfolk Southern's coal business helped drive a 16 percent drop in its first-quarter profit. The Norfolk-based railroad, whose Lamberts Point operation is among the biggest coal-export terminals in the world, reported a 20 percent drop in export coal volumes in the first quarter. The railroad also serves a terminal in Baltimore. "Persistent weak conditions in the global marketplace, soft prices and a strong U.S. dollar made it very difficult for U.S. coals to compete in this oversupplied environment," Jim Squires, Norfolk Southern's president, told analysts in an April 29 teleconference. For years, coal has been Norfolk Southern's largest commodity group as measured by revenues, though it has been in a slide recently. Much of the railroad's coal franchise supports domestic utilities, supplying about 84 coal-burning power plants, according to its 2014 annual report. That accounts for about two-thirds of the company's coal business. Export coal accounted for about 16 percent of Norfolk Southern's coal tonnage last year, with the balance split between coal used in domestic steel production and other industrial uses. In 2011, revenues from coal accounted for about 31 percent of Norfolk Southern's total railway operating revenues. In 2014, it had dropped to 21 percent. An Old Dominion University study released in 2013 calculated the impact of coal shipments through Hampton Roads, including indirect effects. It estimated that in 2011, the year studied, the more than 42 million tons that moved through port terminals generated roughly $900 million in goods and services and nearly 4,200 jobs locally. Robert McCabe, 757-446-2327, robert.mccabe@pilotonline.com pilotonline.com http://www.energycentral.com/functional/news/news_detail.cfm?did=36120200 |