MET COAL SERIES: US suppliers flock to demand-rich Asia as regional steel expansion gains traction

This five-part story series examines the coking coal market from a few angles. This first part focuses on India's rising importance in spot markets. The second part visualizes the nation's meteoric rise in met coal demand , the third examines Australia's continued dominance as an exporter, the fourth examines Chinese demand. This part explores how US exports hinge on the growth of Asia's blast furnace capacity.

US metallurgical coal suppliers have sharpened their focus on Asia, betting on firmer growth projections for emerging markets following sluggish demand in Europe and Brazil, and as interest in steel decarbonization pushed coke plants to shut in the UK and Czech Republic.

US producer Arch Resources said large blast furnace mills built in Indonesia, Vietnam and Malaysia are seeing increased demand for imported coals. This is on top of new demand and import met coal growth in China and East Asia for US high-volatile hard coking coals with specific qualities unavailable from suppliers such as Australia and Canada.

"We've talked a lot about this continuing shift towards Asia and absolutely, we are seeing interest continuing to grow from new customers, new projects in Asia," Arch SVP for strategy and public policy Deck Slone said last month.

US miner Warrior Met Coal is banking on Asia, as well as long-term Atlantic and East Asian buyers to meet expanding production.

Warrior may close in on the largest US met coal miners by production volume once the Blue Creek underground high-vol mine starts longwall production, planned for Q2 2026, and Mine No. 4 ramps up further. The high-volatile Blue Creek mine is starting production in Q3 this year using continuous miner units.

Warrior CEO Walt Scheller said Asia represents its main spot opportunities. Atlantic demand in the first quarter was strong, focused on contract demand with limited spot opportunities, he said in a May 1 analyst call.

Spot market conditions

A recent cooling in spot met coal demand from India and China led to lower realized spot pricing compared with 2023 and 2022. Less immediate interest in US coals, which see longer sailing times to Asia along with market risks with eventual usage in coke plants and steel deliveries, has been picked up in the market.

"Spot opportunities are expected to remain scarce and mostly skewed towards the Pacific Basin, where current pricing levels and freight costs are driving lower than desired average net selling prices," Scheller said.

"On the demand side, we observed a sudden retreat of demand interest from China and India".

Arch also saw limited spot demand in Asia even though new term-based interest in the region to take high-vol A was strong, with Slone saying the producer was not looking to buy urgently.

Despite ongoing weaker steel industry cycles in China and other parts of Asia, the region's steel output continues to grow, mainly using the blast furnace route. Imports from Australia, the US and Canada were competing with generally lower quality supplies from Russia, Mongolia, Indonesia, Mozambique, as well as domestic coals from China and India.

With projected faster economic expansion in emerging markets such as Southeast Asia and the Indian subcontinent, long-term steel demand will likely push imports of met coal, including pulverized coal injection grade, which is blown into blast furnaces to cut coke consumption.

US qualities increasingly diverge

New US mines such as Arch Resources' Leer South and the AMCI-led Allegheny Met's Longview mine have come online, as well as a ramp up at Ramaco's existing Elk Creek complex. Such mines are targeting Asia and Atlantic markets, with spot sales and trials to ensure end-users and other buyers are accustomed to coal specifications, so they can be properly utilized in coke blends and evaluated.

A wider range of US coals have seen an increase in trials across Asian and Atlantic markets, especially into India.

Prices agreed into India's growing spot met coal business have become a bigger global reference.

India's 2023 inflows showed increased trade dominance by US brands for mid-vol HCC products such as Cambria Creek, Pond Fork, as well as various high-vol B and semi-softs. Some imports were recorded for Leer, Wellmore and US low-vol and mid-vol brands and specification coals, partly for use in industrial trials and new marketing.

Alabama mines as well as Central Appalachian projects from Alpha and Coronado, are helping to meet demand amid resource depletion.

With greater volumes of newer US coals and specifications looking for markets, sales to Asia have seen some qualities moving away from US high-vol A HCC and high-vol B HCC brands, which are mainly produced and sold against long-term contracts into North America, Europe, Brazil and Northeast Asia.

Some US coals have seen greater middlings being utilized or use of specific blends in Asian trade. As well, a wide range of US coals have seen trials in various coke batteries, including stamp charging plants that can require less premium and high fluidity coals compared with gravity charging coke plants. Trials and inaugural commercial shipments may see specific pricing terms to incentivize taking on new coals.

Ramaco and the biggest US met coal miner Alpha Metallurgical Resources have invested to supply a range of low-vol, mid-vol, and high-vol coking coals from their own mines.

End-users in Brazil, as well as in Europe, already rely on a mix of US qualities.

More users are realizing that it is possible to produce premium quality met coke just using US coals with no Australian premium grades, according to Bill McFadden from US-based trader Deep Creek Resources.

Shipping constraints

The halt to coal shipments from Baltimore late-March after the collapse of the Francis Scott Key Bridge follows disruption at CSX Curtis Bay Piers in 2021. These incidents led more Northern Appalachian coals from Pennsylvania, northern West Virginia and Maryland to be trans-routed to Hampton Roads terminals, served by the CSX and Norfolk Southern railroads.

Arch, which uses Curtis Bay B to export Leer coal, earlier said the closure of Baltimore for coal shipments should not have any impact on production. The halt has "likely constrained Q2 coal shipments somewhat," the extent depending on timing and potential to load after reopening.

US coal shipments to Asia primarily use the Cape of Good Hope route. Some earlier coal shipments via the Suez and Panama canals to meet preferences from end-users, or to reduce timing risk in cargo pricing with discharge, have become complicated by higher freight costs and lower interest from shipowners to transit the Red Sea.

"For our customers, we're still seeing with the issues in the Red Sea is longer transit times for that coal to get to customers. And the same thing is with the Panama Canal," Warrior CEO Scheller said.