Coal

Coal production. U.S. coal production totaled 579 million short tons (MMst) in 2021, up 44 MMst (8%) from 2020. The 2021 increase primarily reflected more consumption of coal in the electric power sector amid an increase in natural gas spot prices, which made coal more economically competitive relative to natural gas for electricity generation dispatch.

In 2022, we expect U.S. coal production to increase by 33 MMst (6%) to 612 MMst. Our forecast coal production increases by 27 MMst (8%) in the Western Region, 3 MMst (3%) in the Interior Region, and 2 MMst (2%) in Appalachia.

In 2023, we expect coal production to increase by 8 MMst (1%) to 619 MMst. Coal production rises by 8 MMst (2%) in the Western Region and by 3 MMst (3%) in the Interior Region. Forecast production declines by 2 MMst (1%) in Appalachia.

Despite less demand from the electric power sector, we expect coal production will grow in 2022 and 2023. The expected increased production reflects demand to replenish depleted coal stocks. Electric power sector inventories saw significant draws in 2021, and we expect stocks to increase by the end of 2023. In our forecast, inventories reach 85 MMst at the end of 2022 and 91 MMst at the end of 2023. In addition, we expect rising demand for coking coal—used for steelmaking—both domestically and for export.

Much of the decrease in coal mine capacity that occurred in 2020 appears to be permanent. Coal producers have experienced labor and capital shortages, which we expect will continue to limit supply in the forecast. Despite these limitations, we forecast more coal production in 2022 and 2023 than in 2021 as utilization at existing mines rises.

Coal consumption. In this forecast, we expect the retirement of approximately 19 gigawatts (GW) of coal-fired power plant capacity through 2023, a decline of 9%. As a result, we forecast electric power sector demand for coal will decrease by 14 MMst in 2022 and by 2 MMst in 2023. Rising natural gas prices led to increased demand for coal-fired power generation in 2H21. We expect that natural gas prices will remain relatively high compared with past years, keeping coal consumption in the electric power sector above 2020 levels but below 2021 levels. The expected decline in electric power sector consumption leads to a decline in overall coal consumption in our forecast. We forecast total U.S. coal consumption for all sectors to decrease by 11 MMst (2%) in 2022 to 534 MMst and by a further 3 MMst (<1%) in 2023 to 532 MMst.

Coal is an essential component of the steel-making process. Demand for coal to make steel increases by 16% in 2022 and by 3% in 2023, particularly for infrastructure-related materials. As a result, we expect demand for coking coal to rise by more than 3 MMst from 2021 to 2023, offsetting some of the decline in electric power sector coal consumption.

Coal trade. Annual U.S. coal exports increased by an estimated 26% in 2021 to reach 87 MMst. Metallurgical coal exports were 47 MMst in 2021, 12% more than the previous year, and steam coal exports were 40 MMst, 47% more than in 2020.

A majority of the 25 leading U.S. coal export destinations increased their imports of U.S. coal in 2021 through October, which is our most recent data. The ongoing trade dispute between Australia and China has continued to increase opportunities for swing coal suppliers, such as the United States, to gain market share and increase overall exports of coal. Between January and October 2021, China imported almost 11 MMst of U.S. coal, more than in the previous four years combined. Metallurgical coal accounts for a large share of China’s imports, representing about 90% of China’s imports of U.S. coal in 2021.

We expect U.S. coal exports will rise by 1 MMst in 2022 and by 3 MMst in 2023. The increase reflects our assumption that the seaborne coal market in 2022 and 2023 will experience slightly higher demand for U.S. coal. Metallurgical coal will drive the increase in coal exports. We assume global steel production, which increased moderately 2021, will grow further during the forecast period and increase U.S. metallurgical coal exports to 50 MMst in 2022 and 55 MMst in 2023. Forecast U.S. steam coal exports total 38 MMst in 2022 and 37 MMst in 2023, largely unchanged from 2021.

Coal prices. The delivered coal price to U.S. electricity generators averaged an estimated $1.98/MMBtu in 2021. Coal prices increased throughout the year as a result of coal market constraints, averaging $1.92/MMBtu in 1H21 and $2.03/MMBtu in 2H21. We forecast that coal prices will fall to $1.94/MMBtu in 2022 and to $1.81/MMBtu in 2023.