U.S. May Ship More Coal, Raising EU Supply, Macquarie Says

The U.S. may increase coal exports, further boosting supply of the commodity in Europe, Macquarie Group Ltd. (MQG) said.

“A big push” to encourage natural-gas burning in the U.S. may drive up coal exports to Europe, China and India, said Hayden Atkins, an analyst in London at Macquarie’s commodities unit. The closing of Germany’s nuclear plants will increase demand in that nation, Atkins said.

U.S. steam-coal exports to Europe in the first quarter more than tripled from a year earlier to 4.9 million metric tons from 1.5 million tons, according to a report on the website of the U.S. Energy Information Administration. U.S. coal exports are at their highest level since 1992, it said.

Exports to the Netherlands jumped to 1.1 million tons from 334,628 tons. Shipments to Germany went to 899,009 tons from 166,314 tons. Trade to the U.K. rose to 852,159 tons from 159,280 tons.

Switching to natural gas from coal in U.S. power generation will accelerate in 2012 because of new Environmental Protection Agency rules to cut emissions of sulfur dioxide and nitrogen oxides, Bank of America Merrill Lynch said July 19.

The Cross-State Air Pollution Rule requires 27 states in the eastern U.S. to cut sulfur dioxide emissions by 73 percent and nitrous oxides by 54 percent by 2014 compared with 2005 levels, Merrill analysts including Sabine Schels in London said. Generators that exceed caps must cut emissions by twice the amount exceeded as a penalty, they said.

China Imports

China’s coal imports may fall 15 percent this year to 94 million metric tons as domestic supply increases, according to Miswin Mahesh, an analyst at Barclays Capital in London. “Signs of comfortable end-user stocks which indicate a well-supplied domestic market and well-performing transport system will help in transporting domestically produced coal within the country,” Mahesh said Aug. 8.

Increased shipments to Europe may curb prices in the 27- nation bloc. Coal for northwest Europe for next year has fallen 6.4 percent since reaching $135 a ton on April 4, its highest intraday level for more than two years. The contract rose 0.4 percent today to $126.35 a ton, according to prices from brokers compiled by Bloomberg. The median forecast for 2012 in a survey of eight analysts by Bloomberg data was $120. Estimates ranged from $89 to $139.

Any further decline in coal would boost the profitability of burning the fuel for power, “which should push up both the demand for and the price of carbon permits,” said Matthew Cowie, an analyst in London for New Energy Finance.

Emissions of greenhouse gases in the European Union’s carbon market, the world’s largest, may be 19.7 billion tons in the eight years starting 2013, known as the program’s phase three, according to a model by analysts at Bloomberg New Energy Finance in London. That’s 5.1 percent more than the model’s forecast on May 31.

Increased demand for fossil fuels including coal in Europe, due to the closure of nuclear stations in Germany, prompted the change in the model’s forecast, along with lower carbon prices, according to New Energy Finance.

To contact the reporters on this story: Ying Diao in London at dying6@bloomberg.net; Mathew Carr in London at m.carr@bloomberg.net

To contact the editors responsible for this story: Stephen Voss at sev@bloomberg.net

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