Coal news and updates

For coal, 2016 was the worst of times and the best of times. A year that began with plunging production, idled furnaces and a spate of bankruptcies ended with mining on the rise, coal plants humming and an ally set to take over the White House.

And 2017 could be better yet. Declining stockpiles, reduced supply and a cold winter mean coal could take back its crown as the top power producer in the United States, financial analysts say.

"It couldn't get any worse, probably, and now things are looking somewhat better and perhaps a lot better," said Matthew Preston, an analyst at Wood Mackenzie, a consultancy.

A change in the political climate has helped, of course. President-elect Donald Trump appears poised to scrap President Obama's plans to cap carbon emissions from power plants. That should help stabilize coal demand, which had been falling at a precipitous clip.

But just as in coal's decline, politics obscure the more important factor behind the industry's rebound — at least in the short term.

Cheap natural gas has steadily eroded coal's market share, and eventually displaced the fuel as America's leading source of power generation.

Coal's woes have been exacerbated by a dramatically oversupplied domestic market. That changed in 2016. The wave of bankruptcies that toppled the country's first- and second-largest thermal coal producers by volume, Peabody Energy Corp. and Arch Coal Inc., coincided with a substantial cutback in production.

The 173 million tons mined in the first three months of the year were the lowest quarterly total since 1981, according to the U.S. Energy Information Administration.

A hot summer helped address the industry's other lingering challenge: giant stockpiles at power plants across the country. Utilities' reserves peaked in January, by Doyle Trading Consultants LLC's estimate. The energy research firm estimated electricity generators accumulated enough coal to power their plants for almost 130 days.

In September, the last month for which data are available, utilities had 100 days of reserves. That's still a high figure. At the same time in 2015, utility reserves were 97 days.

The difference now is climbing gas prices, projections for a cold winter and recently restructured mining firms, now unencumbered by previous debts.

"On the domestic thermal side, we'll see stockpiles continue to drop, which will bring the market back into balance and reflect coal's actual value," said Hans Daniels, CEO of Doyle Trading Consultants.

Source:scientificamerican