Sunlight reflected off coal at Dominion Terminal Associates' coal terminal in Newport News, Va., in 2014. Dominion operates one of three major coal-export facilities near the Norfolk, Va., area. Photo: Patrick Semansky/Associated Press
Rising coal prices could get another boost as Hurricane Florence shuts down exports from the Virginia coast, halting supplies to elsewhere in the world.
With the powerful hurricane bearing down on the Southeast, terminals in and near Norfolk, Va., that handle the majority of U.S. coal exports were, as of Thursday afternoon, permitted to receive ships on a case-by-case basis, needing approval by the U.S. Coast Guard. Ships have moved to deeper waters to ride out the storm.
Cutting off exports could support coal prices, which have already been rebounding, according to Seaport Global Securities LLC analyst Mark Levin. Demand for the type of coal used to produce coke for steel mills and the type that powers electricity plants have lifted coal prices recently, he added.
As Hurricane Florence bears down on the U.S., here's what you need to know about the dangerous East Coast storm. Photo: NASA/Associated Press
The U.S. price for one grade of coal used to create steelmaking coke has climbed close to 9% in the last week to $202 a ton Thursday, data from S&P Global Platts show. The price is up 17% since the start of August.
“Anything that can make a tight market any tighter is something that people watch,” Mr. Levin said.
According to Seaport Global, three major coal-export facilities in and near the Norfolk area handle more than half of all U.S. coal exports: the Lamberts Point Coal Terminal, operated by Norfolk Southern Corp. ; Kinder Morgan Inc.’s terminal; and one operated by Dominion Terminal Associates, a company whose owners include ArchCoal Inc.
Exports from the Virginia terminals have grown 33% to 30 million tons so far this year from the same period in 2017, according to a Seaport research note that cites data from Dominion Terminal Associates. That data tracks exports from all three facilities in and near Norfolk.
But coal producers dependent on the Virginia terminals may not be able to immediately reap gains from higher prices.
“If you can sell the stuff and get it out of the country, that’s really good; but right now, your vital conduit is shut down,” said Bill Wolf, a vice president at the John T. Boyd Company, a mining and geological consultant.
A spokeswoman for Kinder Morgan declined to answer questions about their terminal near Norfolk, but said the company is “taking necessary precautions…to ensure that we are prepared to resume operations as quickly as possible.”
Norfolk Southern “works with customers individually to address any potential delays,” a spokeswoman said. An executive for Dominion Terminal Associates didn’t immediately respond to a request for comment.
Write to Micah Maidenberg at [email protected]