The U.S. Energy Information Administration further lowered its coal production forecasts for 2020, predicting a 25% drop in domestic coal production from 2019 levels in its most recent “Short-Term Energy Outlook.”
As the coronavirus pandemic battered electricity demand and brought construction sites and manufacturing plants around the world to a pause, the EIA began to revise down its outlook, predicting a 22% drop in April and then a 24.3% decline in May. Continuing that trend, the agency said in a June 9 report that U.S. coal mines would produce 530 million tons in 2020 from an estimated 705 million tons in the prior year, citing a compilation of negative market factors including slipping demand for coal-fired power generation and faltering steel and metallurgical coal demand overseas.
Global steel and coking coal demand have diminished met coal output, resulting in a projected 35% decline in output from mines in the Appalachian region of the U.S., the report stated. Meanwhile, production in the Western region is expected to see a 25% drop due in part to reduced thermal coal demand from key export destinations including India and lower coal-fired electricity demand in the U.S., according to the report.
U.S. metallurgical coal exports are expected to fall 32.3% in 2020 to 37.3 million tons from an estimated 55.1 million tons in 2019, according to EIA’s outlook. Thermal coal shipments overseas are similarly anticipated to sink 30.2% to 26.3 million tons from approximately 37.7 million the previous year.
EIA maintained a view stated in May that production will recover in 2021 to roughly 549 million tons and that U.S. met coal and thermal coal exports will also rebound, a projection some market observers have disagreed with. In addition, the average delivered coal price will decrease from an estimated $2.02/MMBtu in 2019 to $1.98/MMBtu before increasing to $2.03/MMBtu in 2021, according to the report.