April 20, 2018 Read More →

U.S. Coal Producers About to Lose More Business

S&P Global Market Intelligence ($):

U.S. coal producers will soon need to find new customers or mine less coal, as a sizable chunk of the sector’s 2017 deliveries went to customers with plans to retire their operations within four years.

About 27.7 million tons, equal to 3.6% of the coal produced in the United States in 2017, was delivered last year to power plants with set plans to retire between 2018 and 2021, according to an S&P Global Market Intelligence analysis. While the sector has seen some regulatory relief and opportunities to export coal, it has continued to struggle with lower coal consumption as older coal-fired power plants are retired or run less and are not replaced by new coal-fired generation.

The amount of coal affected varies by company and region. In the Four Corners coal region, for example, about 31.2% of the coal delivered in 2017 went to power plants that are set to retire between 2018 and 2021. In contrast, the Central Appalachia region, which increasingly is focused on markets for its metallurgical coal used in steelmaking, had just over one-third of a percent of its 2017 coal production delivered to those soon-to-retire power plants.

Even more coal could be searching for a new home in the market as the figures do not include plant retirements that have been announced but have not yet been assigned a specific retirement date. The totals also do not include any coal that may have been burned by power plants that were operational at some point in 2017,  but retired by the end of the year.

The largest exposure by tonnage is in the Powder River Basin, where about 12.6 million tons were delivered to coal plants set to retire in the period. Another 5.0 million and 4.7 million tons of coal were delivered to retiring plants from the Northern Appalachia Basin and Illinois Basin, respectively.

More ($): Next Wave Of Power Plant Retirements Will Shrink Coal Demand By 28 Million Tons 

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