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Released January 23, 2020 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--It wasn't that long ago that coal interests predicted rising U.S. coal exports would offset falling domestic consumption, making the industry more or less whole. That was briefly true in 2018, as exports rose sharply, but production and exports fell in 2019, and further declines for both are expected for 2020 and 2021, according to this month's Short-Term Energy Outlook (STEO) from the U.S. Energy Information Administration (EIA) (Washington, D.C.).
The outlook for coal was made dimmer by the January 14 decision by the Richmond, California, city council to prohibit future exports of coal from its operating terminal. As much as 25% of U.S. West Coast coal exports -- roughly 1 million tons per year -- reportedly moved through that terminal in recent years. The terminal is operated by Levin-Richmond Terminal Corporation (Richmond, California).
Richmond Confidential, an online news service produced by the University of California at Berkeley, quoted Jim Holland, Levin-Richmond Terminal's vice president, as saying; "The adoption of the ordinance is likely to put the terminal out of business. Levin would have no choice [other] than to seek litigation." The new law requires coal exports to be phased out over three years.
More generally, Joe Govreau, Industrial Info's vice president of research for the Metals & Minerals Industry, commented: "Coal has had a rough decade, and the loss of the Richmond export terminal will make a bad situation worse."
Despite the cheers of environmental advocates, it's too early to write coal's obituary. The Trump administration's ongoing efforts to provide subsidies for uneconomic coal-fired power plants could succeed at boosting domestic coal demand and production. The president's plan to revamp the National Environmental Policy Act (NEPA), unveiled earlier this month, also could enhance the outlook for coal exports. But that draft rule, when finalized later this year, is expected to be litigated, pushing potential coal exports farther off into the future. For more on that, see January 13, 2020, article - See You in Court? Litigation Likely as Trump Proposes Changes to Major Environmental Law.
In a web conference last week, consultants ABB (NYSE:ABB) (Zurich, Switzerland) predicted full-year 2019 U.S. coal production would fall to about 690 million short tons, making 2019 the third year in a row that production has declined. Over the last decade, domestic coal production has fallen by over 30%, from recent peaks of over 1 billion short tons in 2010 and 2011. This month's STEO predicts coal production will continue falling for 2020 and 2021.
Click on the image at right to see U.S. coal production by year since 2010 (source: ABB).
In a separate recent report from the EIA, its Quarterly Coal Report, released earlier this month, provided a more granular look the quarter-to-quarter declines in U.S. coal production. EIA said third-quarter 2019 coal production fell 6.9% from the comparable year-earlier quarter. Production in the Western region, which represented about 56.4% of total U.S. coal production in the third quarter of 2019, was 7.8% less than the third quarter of 2018.
Third-quarter domestic coal consumption was 168.2 million short tons, 13.4% less than the comparable year-earlier quarter but 29.5% higher than in second-quarter 2019, the EIA said.
At 21.9 million short tons, U.S. coal exports for the third quarter of 2019 fell 13.4% from the second quarter of 2019. During the third quarter, steam coal exports (8.4 million short tons) fell 17% on a quarter-over-quarter basis, while metallurgical coal exports declined 11% to 13.5 million short tons.
In early 2019, coal exports (steam and met combined) briefly hovered near the top of their five-year range, but exports began going downhill in midyear, and have not reversed course.
Click on the image at right to see the last 12 months of monthly coal exports as compared to their five-year range (source: EIA).
The EIA projects coal exports will fall to about 82.6 million short tons this year before ticking up a bit in 2021, to 83.2 million short tons.
Some of the reason for this dour outlook is economic, and some is political. Neither seem likely to be resolved in coal's favor, at least in 2020.
Domestically, electric utilities have turned away from coal in recent years. Last year, an estimated 15,000 megawatts of coal-fired generating capacity was either closed or fuel-switched to burn natural gas. Environmental regulation, state energy policies, inexpensive natural gas and the growing competitiveness of renewable generation like wind and solar have contributed to coal's loss of market share in the electric power market over the last 5-10 years. All of these factors cut sharply into domestic demand for thermal coal.
Overseas, while Asian demand for thermal coal continues to be strong, Australian exporters have captured a significant portion of that market. One reason for that is that permitting issues have stalled proposed coal export terminals on the West Coast that were designed to meet rising coal demand in Asia. Also, several proposed West Coast export terminals have been cancelled in recent years.
Proposed coal-export terminals in Oregon and Washington were cancelled a few years back. Another proposed export terminal, the Longview Columbia River Bulk Material/Coal Terminal in Washington State, has been stalled for years over an inability to get a permit from the state. For more on that, see October 30, 2017, article - Conference: CCS, Exports Key for Revival of Western Coal and July 26, 2017, article - Will Exports Drive a Revival of the U.S. Coal Industry?
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
The outlook for coal was made dimmer by the January 14 decision by the Richmond, California, city council to prohibit future exports of coal from its operating terminal. As much as 25% of U.S. West Coast coal exports -- roughly 1 million tons per year -- reportedly moved through that terminal in recent years. The terminal is operated by Levin-Richmond Terminal Corporation (Richmond, California).
Richmond Confidential, an online news service produced by the University of California at Berkeley, quoted Jim Holland, Levin-Richmond Terminal's vice president, as saying; "The adoption of the ordinance is likely to put the terminal out of business. Levin would have no choice [other] than to seek litigation." The new law requires coal exports to be phased out over three years.
More generally, Joe Govreau, Industrial Info's vice president of research for the Metals & Minerals Industry, commented: "Coal has had a rough decade, and the loss of the Richmond export terminal will make a bad situation worse."
Despite the cheers of environmental advocates, it's too early to write coal's obituary. The Trump administration's ongoing efforts to provide subsidies for uneconomic coal-fired power plants could succeed at boosting domestic coal demand and production. The president's plan to revamp the National Environmental Policy Act (NEPA), unveiled earlier this month, also could enhance the outlook for coal exports. But that draft rule, when finalized later this year, is expected to be litigated, pushing potential coal exports farther off into the future. For more on that, see January 13, 2020, article - See You in Court? Litigation Likely as Trump Proposes Changes to Major Environmental Law.
In a web conference last week, consultants ABB (NYSE:ABB) (Zurich, Switzerland) predicted full-year 2019 U.S. coal production would fall to about 690 million short tons, making 2019 the third year in a row that production has declined. Over the last decade, domestic coal production has fallen by over 30%, from recent peaks of over 1 billion short tons in 2010 and 2011. This month's STEO predicts coal production will continue falling for 2020 and 2021.
Click on the image at right to see U.S. coal production by year since 2010 (source: ABB). In a separate recent report from the EIA, its Quarterly Coal Report, released earlier this month, provided a more granular look the quarter-to-quarter declines in U.S. coal production. EIA said third-quarter 2019 coal production fell 6.9% from the comparable year-earlier quarter. Production in the Western region, which represented about 56.4% of total U.S. coal production in the third quarter of 2019, was 7.8% less than the third quarter of 2018.
Third-quarter domestic coal consumption was 168.2 million short tons, 13.4% less than the comparable year-earlier quarter but 29.5% higher than in second-quarter 2019, the EIA said.
At 21.9 million short tons, U.S. coal exports for the third quarter of 2019 fell 13.4% from the second quarter of 2019. During the third quarter, steam coal exports (8.4 million short tons) fell 17% on a quarter-over-quarter basis, while metallurgical coal exports declined 11% to 13.5 million short tons.
In early 2019, coal exports (steam and met combined) briefly hovered near the top of their five-year range, but exports began going downhill in midyear, and have not reversed course.
Click on the image at right to see the last 12 months of monthly coal exports as compared to their five-year range (source: EIA). The EIA projects coal exports will fall to about 82.6 million short tons this year before ticking up a bit in 2021, to 83.2 million short tons.
Some of the reason for this dour outlook is economic, and some is political. Neither seem likely to be resolved in coal's favor, at least in 2020.
Domestically, electric utilities have turned away from coal in recent years. Last year, an estimated 15,000 megawatts of coal-fired generating capacity was either closed or fuel-switched to burn natural gas. Environmental regulation, state energy policies, inexpensive natural gas and the growing competitiveness of renewable generation like wind and solar have contributed to coal's loss of market share in the electric power market over the last 5-10 years. All of these factors cut sharply into domestic demand for thermal coal.
Overseas, while Asian demand for thermal coal continues to be strong, Australian exporters have captured a significant portion of that market. One reason for that is that permitting issues have stalled proposed coal export terminals on the West Coast that were designed to meet rising coal demand in Asia. Also, several proposed West Coast export terminals have been cancelled in recent years.
Proposed coal-export terminals in Oregon and Washington were cancelled a few years back. Another proposed export terminal, the Longview Columbia River Bulk Material/Coal Terminal in Washington State, has been stalled for years over an inability to get a permit from the state. For more on that, see October 30, 2017, article - Conference: CCS, Exports Key for Revival of Western Coal and July 26, 2017, article - Will Exports Drive a Revival of the U.S. Coal Industry?
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
