U.S. Energy Information Administration - EIA - Independent Statistics and Analysis
Short-Term Energy Outlook
Recent changes in the global coal market contributed to lower U.S. coal production in the second quarter. Slower growth in world coal demand, lower international coal prices, and higher coal output in other coal-exporting countries have all led to a two-year decline in U.S. coal exports. Australia, the world's second-largest coal exporter, has seen exports continue to increase, but export earnings are expected to fall this year. Lower mining costs, cheaper transportation costs, and favorable exchange rates will continue to provide an advantage to Australian coal producers over their American counterparts in the forecast period. Other major coal-exporting countries (Indonesia, Colombia, Russia, and South Africa) currently have similar advantages compared with U.S. coal producers.
Activities in major coal consuming nations (China and India) have also affected the global coal market. India has seen an upswing in domestically produced coal, causing Indian coal import growth to be nearly flat. Chinese demand for coal and coal imports has fallen as well. Several factors have contributed to these developments, including slower electricity demand and industrial growth and the imposition of more stringent environmental regulations on the power and energy-intensive industries. Imported coal has also been affected by the levying of new taxes and stricter environmental quality testing, which has seen some imported shipments of coal being denied entry.
EIA projects coal exports will fall by 14 million short tons (MMst), to 83 MMst, in 2015, and remain at that level in 2016. U.S. coal imports, which increased by more than 2 MMst in 2014 to 11 MMst, are expected to remain near that level in 2015 and 2016.
Lower domestic coal consumption and exports, combined with a slight increase in coal imports, are projected to contribute to an 83 MMst (8%) decline in production for 2015. Coal production is expected to decrease in all coal-producing regions in 2015. However, production is expected to increase by 10 MMst (1%) in 2016, driven by modest production growth in the Interior region and the Western region, as coal use increases in the electric power sector.
Electric power sector stockpiles increased to 175 MMst in May (the most recent month for which data are available), a 4% increase from the previous month. This monthly increase (April to May) in coal inventories follows the normal spring pattern in which coal stockpiles are usually built up for use in the summer months. Coal inventories were 38 MMst higher than in May 2014 when inventories were still recovering from the effects of colder-than-normal temperatures earlier in the year, and they are only 2 MMst lower than the previous five-year average for the month.
EIA expects a 7% decrease in coal consumption in the electric power sector in 2015. Lower natural gas prices and the growth of renewable-based generation are the key factors driving the decrease in coal consumption. Projected low natural gas prices make it more economical to run natural gas-fired generating units at higher utilization rates even in regions of the country that typically rely more heavily on coal-fired generation (Midwest and South). Nonhydropower renewable-based electricity generation is expected to grow by 4% in 2015, with the largest growth occurring in the South (8%). The retirements of coal-fired power plants in response to the implementation of the Mercury and Air Toxics Standards (MATS) also reduces coal-fired capacity in the power sector in 2015, but the full effect of the coal plant retirements on capacity will be felt in 2016.
Projected rising electricity demand and higher natural gas prices next year are expected to contribute to higher utilization rates among the remaining coal-fired fleet. Even with continued implementation of MATS, which the U.S. Supreme Court recently sent back to the U.S. Court of Appeals for the D.C. Circuit for further review, coal consumption in the electric power sector is forecast to increase by 1.9% in 2016.
The annual average coal price to the electric power sector decreased from $2.39/MMBtu in 2011 to $2.36/MMBtu in 2014. EIA expects the delivered coal price to average $2.28/MMBtu in 2015 and 2016.
|U.S. Coal Summary|
|2013||2014||2015 projected||2016 projected|
|Prices||(dollars per million Btu)|
|Electric Power Sector||2.34||2.36||2.28||2.28|
|Supply||(million short tons)|
|U.S. Coal Production||984.8||999.7||916.9||926.7|
|Consumption||(million short tons)|
|Electric Power Sector||858.0||851.4||793.0||808.0|
|End of Period Inventories||(million short tons)|
|Electric Power Sector||147.9||151.4||155.7||151.1|