US coal to gain from Aussie-China trade dispute, EIA says

U.S. coal producers will benefit from increased market share obtained amid a trade dispute between Australia and China over coal trade, the U.S. Energy Information Administration said July 7.

Coal exports are expected to increase 21% in 2021 as the seaborne steam coal market seeks swing suppliers to fill the vacuum created by the trade dispute, the EIA said its latest "Short Term Energy Outlook." This dispute has allowed U.S. coal producers to "gain market share and increase overall exports especially for steam coal," the EIA said.

Coal exports are also expected to benefit from top coal importing nations rebounding economically from the coronavirus pandemic as steel production returns to historically average output. Coal exports are expected to grow another 18% in 2022 as seaborne coal supply meets pre-pandemic levels, according to the EIA.

"Rising U.S. exports in the forecast reflect smaller export volumes from other global suppliers and seaborne coal prices that are supportive of U.S. exports," the EIA said.

Coal production in 2021 will reach 617 million tons, a 78 million-ton increase from 2020 levels, according to the EIA forecast. Broken down by producing region, production will increase by 51 million tons in the Western region, 13 million in Appalachia and 14 million tons in the Interior, the EIA said .

But the EIA's coal forecast was not entirely optimistic as the agency said coal capacity lost in 2020 during the pandemic is "unlikely to come back online." Coal output was projected to fall in 2022 to 610 million tons due to an anticipated drop in natural gas prices, a decline expected to be driven by reduced output from the Western region of the U.S., the EIA said.

Coal prices are expected to sink to $1.88/MMBtu in 2021, from $1.92/MMBtu in 2020, then fall to $1.85/MMBtu in 2022, according to the EIA.