Pricing impacts uncertain for thermal coal, petcoke after Baltimore bridge collapse

Thermal coal and petcoke market participants had mixed views on potential pricing impacts following a major bridge collapse in the US city of Baltimore March 26.

"I don't have a crystal ball for the direction of coal prices," a US-based coal broker said. "I would suspect a temporary uptick in global prices to replace US NAPP coal but with demand lukewarm, prices could remain unchanged. Petcoke prices, probably similar -- no changes. Biggest impact is to cash flow to companies like Consol."

The Frances Scott Key bridge in Baltimore fell into the Patapsco River after a ship, the Dali, from Singapore struck a supporting pylon early March 26. The ship remained stuck in the debris, sources said. A mining source based near Baltimore said shipping agents confirmed navigation through Baltimore Harbor is suspended with no timeline for opening.

"The incident will restrict NAPP shipments from Arch Coal and create numerous problems in the supply chain for India," a US-based trader said. "Possible effect on thermal coal to Europe. Bigger impact is India. Watch the petcoke prices jump!"

The port of Baltimore near the bridge is the largest in the US for specialized cargo. Baltimore was the top loading location for US thermal coal exports in 2023, US Census Bureau data showed.

"The authorities will take six-seven days to assess how much debris is there from the incident and how much draft is available, because if the draft is low, then it could be a problem," an India-based trader said. "The authorities may take 10-15 days to clear out the debris, so it means no ship movement during this period."

Platts March 26 assessed FOB Baltimore 6,900 kcal/kg NAR down 15 cents on the session at $81.60/mt, based on market fundamentals and broker indications of value at $76.86/mt and $81/mt, tested in the market through 11:30 am ET.

Another coal market participant, a Singapore-based trader, said FOB Baltimore physical thermal coal prices were unlikely to be supported by the US bridge incident.

"Paper should be supported but physical won't. There isn't much demand in fact," the trader said of FOB Baltimore thermal coal prices. "It will unlikely support petcoke price. Cements have ample stock at plant & port. Freight has softened as well."

The Hampton Roads terminals in Virginia offer an alternative route for US NAPP and CAPP coal exports, but a terminal operator previously told Platts that East Coast ports were already at maximum capacity. Platts assessed FOB Hampton Roads 6,000 1%S at $87/mt March 26, flat on the day, based on a broker indication of value at $87/mt, tested in the market through 11:30 am ET.

An analyst from S&P Global Commodity Insights said: "I don't believe that it will necessarily raise coal prices -- that would indicate that the market is balanced on a knife edge. Nor do I believe it will raise freight prices, at least not right now. It may provide a small bump for a short period to Colombian coal prices. My initial reaction is that 2.5 to 4 million mt of coal may be delayed until the waterway can be cleared. Over a longer period, if the water way is cleared in a week to two weeks, it will be less of an impact."

The US exported 4.3 million mt of thermal coal from Baltimore to date in 2024, with over half of the volume, or 2.7 million, heading to India, according to S&P Global Commodities at Sea data. Other key destinations included China, Canada, and the Netherlands. Primary shippers included Arch Resources, Consol, Javelin, XCoal and JERA, CAS data showed. Meanwhile, only a single shipment of petcoke with 61,900 mt has been exported through the Baltimore port to India during the same period.

"First, only two ports get impacted by this incident: one is CSX and CNX. Looking at these two ports I don't see there is much quantity of coal that will move out from the market. Second point: I have not seen any force majeure from any major supplier like Consol or Javelin or Arch or any other supplier," a second India-based trader said.

The trader said that two major industries in India use NAPP coal: the cement industry, which isn't buying NAPP right now because petcoke is cheaper; and brick kilns, which are already overstocked.

"They won’t get any additional demand from this market because it’s already oversupplied so it will give them relief if the vessel doesn’t come," the second India-based trader said.

Container rates steady

There was no impact to container vessel rates March 26, although market sources were monitoring where vessel traffic would be diverted.

Platts assessed container rate 5 -- North Asia to East Coast North America -- at $4,100/FEU March 26, unchanged on the day.

"I’m sure that any excuse the lines can use to raise rates, they’ll try. However, it will be tough to stick as Baltimore is not New York or Savannah," said a North American freight market source.

The Port of Baltimore "handled around 3% of all US East and Gulf coast imports and 10% of US Northeast imports of containerized freight in the 12 months to Jan. 31, 2024," according to S&P Global analysts John Raines and Chris Rogers.

The port handled 650,897 twenty-foot equivalent units "of inbound traffic and 272,8590 TEUs of outbound shipments in the 12 months to Jan. 31, 2024," the analysts said in a report.

"Container freight accounted for 75% of volumes handled through the port in the past 12 months, with autos and roll-on, roll-off capacity representing another 18%, while bulk shipments of steel and forestry products accounted for much of the remainder," they said.

That container traffic will likely have to be shifted to other area ports, including ports in New York, New Jersey and Norfolk, Virginia.

Refined products supplied by pipeline

The bridge collapse had little to no impact on US refined products prices.

"It is not a relevant oil port; no refineries, tiny demand," a refined products trader said.

"While cargo shipping into the area will no doubt be impacted by this event, fuel supplies are unlikely to see any notable change since the nine fuel terminals in Baltimore are primarily supplied by Colonial Pipeline," said wholesale fuels distributor TACenergy in a report.

"Barges from Philadelphia refineries do supplement Baltimore supplies at times, and those vessel flows will be impacted at least until rescue operations are completed and the bridge sections removed from the waterway," the firm added. "That said, since shipping up from the Gulf Coast via Colonial is generally cheaper than shipping an NY Harbor-priced barrel south, the amount of supply disrupted by this event will be minimal."

The impact on polyethylene, polypropylene and polyvinyl chloride trade flows is still being determined, but it is not expected to be significant, according to market participants.

A vast majority of resin outflows leave from ports further down the East Coast or on the Gulf Coast, including Savannah, Georgia; Charleston, South Carolina; and Houston-Galveston, according to US International Trade Commission figures. In 2023, the Baltimore port saw a total 1,236 mt of PE, PP and PVC resin exports -- less than 0.001%.

"I have not heard any impact on the polymer side," a distributor source commented. "Baltimore is not a major exporting port so not sure if it has much impact."