LONDON -- U.S. coal exports to Asia surged in 2017, and there is an argument to be made for America to become an even bigger global supplier of the fuel, a Nikkei Asian Review study has found.
By volume, U.S. coal exports to Asia doubled last year, compared with 2016. The total reached 32.8 million short tons -- a short ton being the equivalent of 907kg. Asia-bound exports of steam coal used for power generation, in particular, more than tripled.
"These export increases have nothing to do with policy, and everything to do with economics," said Elias Johnson, coal analyst for the U.S. Energy Information Administration.
With the use of coal diminishing in the U.S., the country's shipments to Japan grew 68%, the equivalent of an additional 3.1 million short tons. To put the extra amount in perspective, imagine piling all that coal into the shape of a tower. The result would be as tall as the 634-meter Tokyo Skytree broadcasting tower, while measuring 68 meters wide and deep.
South Korea imported twice as much American coal in 2017 than the year before due to Seoul's decision to distance itself from nuclear power, Johnson said. "The country has also added coal fire capacity for electricity generation." Formed into a hypothetical cube, the additional coal would run 168 meters on each length and reach three-fifths of the way up the 264-meter Samsung Tower Palace building in Seoul.
India, the largest importer of U.S. steam coal, brought in three times its 2016 volume, mainly to feed its growing electricity demand. The extra coal could fill a box as long and wide as the Taj Mahal garden while nearly reaching the palace's height of 73 meters.
China, which this year entered a fierce trade battle with the U.S., imported 225% more American coal. The country is the largest coal producer but also the No. 1 consumer. Beijing's decision to shut down a number of coal plants across the country contributed to a bottleneck, which had a knock-on effect on the rest of Asia's coal supply.
Low freight rates were a major factor encouraging U.S. exports to Asia. Given the greater distance, cheap shipping is crucial for keeping American coal competitive with supplies from Australia and Indonesia.
The Baltic Dry Index, a proxy for dry bulk shipping stocks, hit the lowest level in its three-decade-plus history in early 2016, though it has slightly recovered since.
Looking ahead, Johnson does not foresee an immediate, significant move by the U.S. coal industry to expand exports further. Right now, the U.S. is considered a swing exporter of coal, meaning it steps in to fill supply gaps when they arise.
That said, he suggested that ramping up exports may look more realistic if the upbeat trend lasts beyond a year or two. So far so good: The U.S. coal export boom continued in the first quarter of 2018, with levels in April reaching heights not seen since 2013.
Datawatch is a series jointly produced by the Nikkei Asian Review and FT Confidential Research.