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US EIA's 2019 coal export outlook falls 9.3% from January to December

Over the course of 2019, the U.S. Energy Information Administration's coal production and export predictions have fallen significantly amid weakening market conditions and a slew of bankruptcy filings in the sector.

While the export market boomed for U.S. producers in 2018, pricing fell significantly in the international thermal and metallurgical coal space this year and now rests at a level where some experts have said U.S. producers simply cannot compete. Domestically, utilities continue to retire coal units amid climate concerns as well as low natural gas prices and increased competitiveness of renewable energy sources.

The EIA reduced its expectations for 2019 and 2020 coal production by 4.5% and 11.6%, respectively, from its January "Short-Term Energy Outlook" to its report released Dec. 10. In January, the agency projected that 2019 coal production would total 729.5 million tons, which was revised to 697 million tons in the latest report. Looking ahead to 2020, the EIA revised its coal output expectations from 679.7 million tons to 601.1 million tons over the course of the year.

On the export front, the agency's tonnage forecast sank by nearly 10% for 2019 and 2020 shipments over the period. The EIA outlined U.S. coal exports totaling 92.9 million tons in 2019 in its latest estimates, down 9.3% from the January estimate of 102.4 million tons. Its 2020 projection fell 9.9% from 94.4 million tons in January to 85.1 million in December.

The EIA's December outlook on coal exports and production was largely consistent with its November report. The agency forecast a 1.1% decline in fourth-quarter coal production compared to its last forecast as the year comes to an end. It projected fourth-quarter coal production in the U.S. dropping to 172.9 million tons from its November forecast of 174.9 million tons. All told, the agency expects 2019 coal production to total 697 million tons, decreasing by less than 1 million tons from its prediction last month and a 7.7% decline from 2018.

In 2020, the EIA expects coal production to fall by an additional 13.8% to 601.1 million tons, "reflecting continued idling and closures of mines as a result of declining domestic demand," the report stated. Exports in 2020 are expected to drop to 85.1 million tons from 92.9 million this year, an 8.4% decrease. Included are metallurgical coal exports forecast to fall 11.8% in 2020 to 47.9 million tons while thermal coal exports slide 3.6% to 37.2 million tons.

Fourth-quarter coal exports are expected to total 20.5 million tons, composed of 11.8 million tons of coking coal and 8.7 million of thermal coal.

"U.S. coking coal currently faces challenges from a global oversupply of steel, particularly in the fourth quarter of 2019. Steam coal exports have been dampened by high stockpiles in Europe and India, a top destination for U.S. shipments," the report stated.

The EIA maintained its projections for coal's share of electricity generation from the November to December report, expecting coal to account for about 25% of electricity this year and 22% in 2020. The agency still expects natural gas to make up 37% of 2019 electricity generation but increased its 2020 projection from 38% to 39%.