Total coal production in the US in July reached the highest volumes since August 2012, according to the US Energy Information Administration (EIA).
Coal production stood at 88.9 million short to for July 2013, representing a 3% increase on July 2012. The Appalachian and western regions also increased coal production by 3% and 4.8%, respectively. While interior regional production declined by 2.8% compared to July last year, coal production at the Illinois Basin did see a slight increase.
With concerns over how oversupplied the market is, and many companies worried about large coal stockpiles at power plants, coal suppliers will be glad to also hear that July 2013 also saw a significant reduction in coal inventories held by electric power producers.
In H1 2013, coal production totaled 486 million short t, 21 million short t – or 4.2% – lower than H1 2012. However, the US EIA expects production to be higher in all US coal regions in H2 2013 and estimates coal production will reach 1,013 million short t by the end of the year.
Coal production is expected to grow further in 2014 by an estimated 3%, as inventories stabilise and coal consumption increases.
Coal prices have remained low so far this year, with markets across the world saturated with an oversupply of coal. However, the latest short-term outlook released by the EIA suggests that, in the US at least, oversupply may be reduced as previously high stockpiles of coal are reduced.
Inventory draws are expected to meet most of the growth in consumption of coal in 2013. Total coal inventories have already fallen by about 19 million short t in H1. EIA forecasts a further 9 million short t of coal will be withdrawn from inventories over the course of the year.
Coal consumption in H1 of 2013 is estimated to be 446 million short t, roughly 9% higher than the amount of coal consumed over the same period in 2012.
The US EIA have suggested that the increase in coal consumption is primarily a result of consumption growth in the electric sector due to higher electricity demand and higher natural gas prices. This trend is set to continue in H2 2013, with total coal consumption expected to reach almost 950 million short t – a 5.8% increase compared to 2012 figures.
US consumption of coal will then likely grow at a more modest 1.8% to 959 million short t in 2014, according to the US EIA.
US coal exports in H1 2013 are estimated to total 61.3 million short t, almost 5 million short t lower than H1 2012. This decline in exports is expected to continue, caused by various factors in Europe, including the impact of environmental regulations and economic weaknesses. The US EIA also predict that Asian demand for coal may well decrease, while other coal-exporting countries will increase their supplies and total exports.
For the first time since 2000, the US EIA predict that nominal annual average coal prices to the electric power industry will fall. It is expected that coal prices will decrease from US$ 2.4/MMBty to US$2.36/MMBtu.
International coal prices are also expected to remain low.
Edited from various sources by Sam Dodson
Read the article online at: https://www.worldcoal.com/coal/13092013/us_coal_production_set_to_increase_45/