Coal news and updates

The US Energy Information Administration revised most of its 2014 projections for the US coal sector lower Tuesday, basing its decisions on weak electricity demand at home and oversupply in global seaborne markets.

 

In its July Short-Term Energy Outlook, the agency said it expects US coal consumption to be 951 million st in 2014, compared with a June projection of 961 million st. The July figure is still up 2.8% compared with 2013 consumption of 925 million st.

 

In 2015, the EIA projects US coal consumption will dip to 924.4 million st due to retirements of coal-fired power plants, slow electricity sales growth and lower natural gas prices.

 

Due to higher coal burn in 2014, the agency forecasts 2014 US coal production will total 1.011 billion st, although that latest prediction is down 0.6% from a June estimate of 1.017 billion st. The revised production figure, however, is a 1.5% increase from 996 million st produced in 2013.

 

The agency now expects 2015 production will total 1.002 billion st, down from its prior month projection of 1.009 billion st.

 

Coal prices are expected to increase in 2014 to $2.39/MMBtu, and to $2.41/MMBtu in 2015, up from June projections of $2.36/MMBtu and $2.38/MMBtu, respectively. The agency did not cite a reason for the projected increases though coal prices fell in 2012 and 2013 to $2.38/MMBtu and $2.35/MMBtu, respectively.

 

The agency forecasts coal's market share of US electricity generation will total 40.3% in 2014, down from 40.5% projected in June but up from 39.1% in 2013. The agency projects the share in 2015 will dip to 38.8%, down from June's estimate of 39.1%, partly due to lower natural gas prices.

 

The agency said Tuesday it believes US Henry Hub natural gas spot prices will average $4.77/MMBtu in 2014, up from $4.74/MMBtu last month, and $3.73/MMBtu in 2013. In 2015, the price is expected to decline to $4.50/MMBtu, up one cent from June's projection of $4.49/MMBtu.

 

The higher 2014 price means US electricity generation from gas will total 26.6% of the mix in 2014, up from 26.5% in the June prediction, but down from 27.4% in 2013. In 2015, the agency now projects gas-fired generation will account for 27.5% of the mix, up from June's projection of 27.4%, as a result of lower gas prices.

 

The agency estimates US coal exports will total 99 million st in 2014, unchanged from its June projection. Exports in 2015 are projected to climb to 95 million st, compared with a June projection of 93 million st.

 

On a historical basis, US coal exports peaked at roughly 126 million st in 2012, and totaled 118 million st in 2013.

 

The agency cites slowing world demand and increased output from other coal exporting nations for the decline in US coal exports for the next two years. The US coal industry, however, expects growing Asian demand to bolster US exports in later years.

 

 

Source: Platts