Coal

U.S. Coal Consumption.

EIA expects that coal consumption in the electric power sector, which averaged over 1 billion short tons annually from 2003 through 2008, will not reach that threshold for a fourth consecutive year in 2012. EIA forecasts coal consumption in the electric power sector to total 829 million short tons (MMst) in 2012. Lower electric power sector natural gas prices have led to a significant increase in the share of natural gas-fired generation. EIA projects power sector coal consumption to grow by 7.8 percent to 894 MMst in 2013 as electricity consumption increases and higher natural gas prices lead to a reduction in natural gas-fired generation.

U.S. Coal Supply

EIA forecasts that coal production will decline by 6.1 percent in 2012 as domestic consumption falls. Production for the first seven months of 2012 was 33 MMst (5 percent) below last year's level for the same period. EIA expects that production will total 1,028 MMst in 2012, 66 MMst below the 2011 total. EIA expects production to grow by 1.4 percent (14 MMst) in 2013 to meet the increase in consumption. Electric power sector stocks, which ended 2011 at 175 MMst, are forecast to total 192 MMst at the end of the 2012. Inventories are expected to decline slightly in 2013, but they will remain at elevated levels.

U.S. Coal Trade

EIA expects U.S. coal exports to remain strong in 2012 and exceed the 107 MMst exported in 2011. The United States exported 12.7 MMst of coal in June, topping April's record-setting amount, and it was the third consecutive month with exports exceeding 12 MMst. EIA projects coal exports to total a record 124 MMst in 2012. EIA expects that coal exports will decline in 2013 but remain above 100 MMst. The primary reasons for the export decline include China's slower economic growth and increased exports from major coal-exporting countries, particularly Indonesia and Australia. U.S. exports could be higher if there are supply disruptions from any of the major coal-exporting countries. U.S. coal exports averaged 56 MMst in the decade preceding 2011.

U.S. Coal Prices

Delivered coal prices to the electric power industry have increased steadily over the last 10 years and this trend continued in 2011, with an average delivered coal price of $2.40 per MMBtu (a 6-percent increase from 2010). However, EIA expects the decline in demand for coal, combined with the large coal inventories, will begin to put downward pressure on coal prices and contribute to the shut-in of higher-cost production. EIA forecasts that the delivered coal price in 2012 will average $2.39 per MMBtu, and remain at that level in 2013.