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US EIA expects YOY decline in coal exports, production to slow in 2021

The decline in coal production and exports will slow considerably or even reverse course from 2020 to 2021 compared with this year's expected trajectory, according to the U.S. Energy Information Administration.

The EIA projected that domestic coal production will fall 13.5% this year to 596.6 million tons. But that decline may level off in 2021 with estimated output totaling 580.6 million tons, slipping 2.7% year over year "as export demand stabilizes and declines in U.S. power sector demand slow," according to the administration's latest "Short-Term Energy Outlook" report, which was released Jan. 14.

Appalachian coal output will see the steepest percentage decline both this year and next, falling 19.6% to 150.9 million tons this year and another 13.8% to 130.1 million tons from 2020 to 2021, according to the analysis. Western production may slump by 15.6% this year to 319.2 million tons and be flat the following year, while output from the interior region remains largely flat this year and could increase by about 4.5% to 132.2 million tons in 2021, the report said.

The seaborne market will improve slightly in 2021 as well, with the EIA forecasting a further 10.6% decrease in shipments this year to 82.6 million tons, increasing to 83.2 million tons the following year. Metallurgical coal exports, which are expected to post a 13.6% year-over-year decline in 2020, may increase by 6.3% to 49.1 million tons in 2021, while international thermal coal shipments decrease by more than 6.3% both this year and next.

During 2019, coal exports fell by 20% year over year to 92 million tons, due partially to competition from Eastern European coal producers and high freight expenses. However, the administration anticipates that U.S. coal exports to Asian growth markets, such as India, Japan and South Korea, will remain stable.

In terms of consumption, the EIA expects 2020 coal use to drop by 11% from 596 million tons last year and by another 3% in 2021. The power sector accounted for 91% of the nation's coal consumption last year, and decreases largely mirror declines in utility coal demand.

"The decrease in power sector coal consumption in 2020 reflects expected coal plant retirements and increasing shares of electricity generation from low priced natural gas and new renewables generating capacity. However, because EIA expects slight rises in natural gas prices in 2021, coal will become slightly more price competitive," the report stated.

Coal's share of the country's energy makeup will fall from 24% last year to 21% in 2020 and 2021, the EIA estimated. Natural gas will account for 38% of the total this year and 37% next year, while renewable energy sources' share increases from 17% in 2019 to 19% in 2020 and 22% in 2021 amid increases in wind and solar generation capacity, according to the report.