The U.S. Energy Information Administration presented a slightly improved outlook for the U.S. coal industry through the end of the year after increasing its expectations for the sector's 2019 production and export totals from its July estimate.
The administration projected in its Aug. 6 "Short-Term Energy Outlook" that the coal industry will produce 687.9 million tons this year, up from the 684 million tons it forecast in July. The EIA expects output to total 651 million tons in 2020, a 1.8% increase from the previous forecast's 639.4 million tons.
The August report includes 2019 and 2020 production increases in the Appalachian, interior and western coal regions from the July forecast with the exception of 2019 western coal output. The administration forecast an 11.7% decline to 369.5 million tons in coal production out of the western region this year compared with 2018, likely due to coal-fired unit retirements, bankruptcies in the Powder River Basin and announced production decreases. While the EIA estimated the western region would produce 351.4 million tons in 2020, the latest report upped that amount to 356.2 million.
The 2019 estimates for production out of the interior and Appalachia did not rise substantially, but the administration increased its 2020 expectation by more than 3 million tons for both regions. Appalachian coal miners are expected to produce 166.1 million tons while interior miners produce 128.6 million tons in 2020.
Exports are expected to sink by 15.6 million tons to 100 million this year, but that is an increase from July's projection of 96.1 million. 2020's exports are expected to total 90.4 million tons, up from 87.8 million tons forecast in July. The new report increased its expectations for 2019 and 2020 thermal and metallurgical coal exports as well.
This year, miners are expected to ship 53.9 million tons of coking coal and 46.1 million tons of steam coal. Coking coal exports are slated to drop to 50.4 million tons in 2020 while thermal coal exports sink to 40 million tons.
The increase from the July to the August outlooks is especially noteworthy given the export headwinds that domestic thermal producers are facing due to low prices on coal sold into Europe. If prices remain low, some U.S. miners may not be able to compete and will be forced to sell that coal into the domestic market, which could depress prices in the U.S. Several railroads that transport coal, as well as producers, have noted softening in the international metallurgical market.
Domestic coal consumption is still expected to total 589 million tons this year, but the administration increased its 2020 consumption estimate to 576 million, from 567 million previously projected.
The EIA expects coal-fired power demand to drop by 15% in 2019 and by another 2% in 2020 as planned coal plant retirements drag on overall utility coal demand, according to the report.
"Almost 13 gigawatts of coal-fired electricity generation capacity has retired this year or is scheduled to retire by the end of 2020, accounting for 5% of the capacity existing at the end of 201," the outlook said.
The administration still expects coal to account for about 24% of the nation's energy mix in 2019, and it increased its 2020 expectation from 23% in the July report to 24% in the new outlook.