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Short-Term Energy Outlook

Release Date: June 9, 2015  |  Next Release Date: July 7, 2015  |  Full Report    |   Text Only   |   All Tables   |   All Figures

Coal

Coal Supply

EIA projects that lower coal demand for domestic consumption and exports contribute to a 70 million short ton (MMst) decline in production for 2015. Production is expected to decline in all coal-producing regions, with the largest decrease in Appalachia (34 MMst, or 13%). Declines in the Interior region and Western region are projected to be 3% and 6%, respectively. Coal production is projected to remain near 2015 levels in 2016.

In response to weak coal demand, several producers have recently announced cuts in production. The expected production cuts are reflected in announced employee layoffs. Previously announced employee layoffs primarily affected Central Appalachian producers, but the current planned reductions are more widespread, affecting production in Central and Northern Appalachia and in the Illinois Basin. Ohio-based Murray Energy announced it would lay offmore than 1,800 miners in Illinois, Ohio, and West Virginia. Alpha Natural Resources (Alpha) stated that it was idling more than 400 employees in West Virginia, Kentucky, and Virginia. Earlier in May, Alpha had announced more than 60 layoffs at a mine in Kentucky. Although it is not reducing its workforce, Consol Energy announced it was switching to a four-day work week at several mines in Pennsylvania.

Coal Consumption

EIA expects a 7% decrease in coal consumption in the electric power sector in 2015, despite a 1% increase in total electric power generation. Lower natural gas prices are the main driver of the decline. 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 (Midwest, South) that typically rely more heavily on coal-fired generation. Increased generation from wind, solar, and biomass is also expected to displace coal-fired generation, as several biomass facilities have been converted from coal-burning facilities. The retirements of coal power plants in response to the implementation of the Mercury and Air Toxics Standards also reduce coal demand in the power sector in 2015. The full effect of the coal plant retirements on capacity will be felt in 2016, but projected rising electricity demand and higher natural gas prices are expected to contribute to higher utilization rates among the remaining coal-fired fleet. Coal consumption in the electric power sector is forecast to increase slightly in 2016.

Coal Trade

Slower growth in world coal demand, lower international coal prices, and higher coal output in other coal-exporting countries have led to a two-year decline in U.S. coal exports. EIA projects coal exports will fall by 8 MMst, to 89 MMst, in 2015, and then increase by 1 MMst 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 over the next two years.

Coal Prices

The annual average coal price to the electric power sector fell from $2.39/MMBtu in 2011 to an estimated $2.36/MMBtu in 2014. EIA expects the delivered coal price to average $2.30/MMBtu in 2015 and $2.31/MMBtu in 2016.

U.S. Coal Summary
  2013 2014 2015 2016
Prices (dollars per million Btu)
Electric Power Sector 2.34 2.36 2.30 2.31
Supply (million short tons)
U.S. Coal Production 983.9 996.7 926.7 925.5
Imports 8.9 11.3 11.3 10.8
Exports 117.7 97.3 89.0 90.1
Consumption (million short tons)
Electric Power Sector 858.0 851.4 792.9 798.1
Other Sectors 66.5 65.4 63.1 62.7
Total Consumption 924.4 916.9 855.9 860.8
End of Period Inventories (million short tons)
Electric Power Sector 147.9 151.4 148.0 145.0
Total Inventories 200.3 203.2 199.5 195.9

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