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U.S. Cuts Coal Production Forecast to Lowest in Almost 3 Decades

The U.S. Energy Information Administration lowered its forecast for coal production for a seventh time this year, projecting that output will drop to the lowest level in almost three decades.

America’s coal output will shrink to 913.6 million tons in 2015, the least since 1986, the agency said in its Short-Term Energy Outlook on Wednesday. That’s down from last month’s forecast of 916.9 million tons.

U.S. miners are curbing output as cheap natural gas cuts into their share of the power generation market while mounting environmental regulations weaken demand and lower prices for their emissions-intensive fuel. Producers are also facing escalating competition from suppliers overseas as the U.S. dollar strengthens.

“Lower mining costs, cheaper transportation costs and favorable exchange rates will continue to provide an advantage to mines in other major coal-exporting countries compared with U.S. producers,” the EIA said in its report Wednesday.

Benchmark Central Appalachia coal has fallen 12 percent since January on the New York Mercantile Exchange, with 2015 on track to become the fifth consecutive year of declines.

“Nobody was expecting it to be a good year for coal, but it’s certainly turned out to be worse than most were expecting,” Jeremy Sussman, an analyst at Clarksons Platou Securities in New York, said by phone Wednesday.

Coal’s share of electricity generation will fall to 35 percent, the lowest in records going back to 1949, EIA forecasts show.

source: http://www.bloomberg.com