According to the National Mining Association's "2001 Forecast of Coal Markets" report, the increase in coal use has been driven by an unprecedented demand for affordable and reliable coal-fired electricity during one of the United State’s coldest winters on record.
Coal used for electric generation approximated 1.002 billion tons in 2000, an increase of 3.1%. In 2001 a total of 1.025 billion tons will be used for the generation of electricity, 985 million by utilities and independent power producers and an estimated 40 million tons by cogenerators and small power producers.
During 2000, coal generated 51% of all US electric output, natural gas accounted for 17%, nuclear 20%, hydro 7%, petroleum 3% and renewables 2%. The NMA’s forecast assumes that coal will gain slightly in 2001 and will hold a 52% share of the market.
NMA president and CEO Jack Gerard said: "Because of the strong US economy and utilities' desire for a clean burning low cost fuel to produce electricity, America's coal mining companies are alive and well and are continuing to produce coal at near all-time historical levels."
Exports in 2001 will add another 65.3 million tons to the overall demand for US coal bringing total consumption levels to 1.151 billion tons, 2.4%, or 27 million tons more than domestic demand plus exports in 2000.
The NMA predicts that production in 2001 will come just short of meeting total demand for US coal and the difference will be met with imports of 10 million tons and with a drawdown in stockpiles.
“By the end of 2001, coal stockpiles at utilities are expected to be lower than at any time since 1974 when consumption was less than one-half of current levels,” the NMA said.
Coal fired power plants will continue to be sold to independent power producers but no new capacity is planned in 2001. Sharply higher natural gas prices have translated into greater dispatch of more affordable coal units. This will continue to be the case throughout 2001. Smaller coal units, which are the units to have excess capacity are expected to continue to operate at high levels throughout the year adding to expected coal burn.
The US steel industry used approximately 29 million tons of metallurgical grade coal for coking in 2000 and will use just slightly less, 28.5 million tons in 2001, according to the NMA. The amount of coal used by the steel industry does not vary significantly from this 28–29 million ton range as this represents the capacity of the US to make coke. Electric furnace production now accounts for close to half of all raw steel produced in the US which means that there is lower demand for coke. If demand does exceed US production levels, coke is imported.
In 2000 US raw steel production was just over 111 million tons, 6.7% higher than raw steel production in 1999. Reflecting a slower economy, steel production will be slightly lower in 2001 at 100-105 million tons, but this will not make a difference in the amount of metallurgical coal consumed.
Coal consumption for industrial purposes and for commercial or retail use is declining with only 32 million tons used by industry in 2000, predicted to be about the same in 2001.
Exports in 2000 totaled 60 million tons up only slightly from the 58.4 million tons shipped to overseas destinations and to Canada in 1999.
Exports of steam coal to overseas destinations totaled 11.5 million tons in 2000 with more steam coal going to Asian destinations than to European destinations. Japan was the largest steam coal customer in 2000.
Metallurgical coal exports overseas totaled 29.5 million tons in 2000 with major customers located throughout the European Union. Japan and South Korea each took just over 1 million tons.
In 2001 the demand for coal in overseas markets is expected to strengthen and US exports overseas are expected to increase by 5 million tons to just over 32 million. Net coal exports will increase by 2.5 million tons and are expected to total 32 million.
The increase is expected to be in both Asia and Europe. Steam coal exports to overseas destination are expected to increase 3 million tons to 14.5 million tons. Although it may be possible for the US to ship more coal overseas, a tight domestic market may mean that less coal is available for export.
A big regional shift in production output is expected. In 1998 eastern production totaled 571 million tons. In 2001, eastern production will be 525 million tons. In 1998, production in the west was 547 million tons. In 2001, western production will total 590 million tons, according to the NMA.
