US rail coal shipments likely will fall this year and continue to drop in 2020 as electric power consumption shrinks, US Energy Information Administration (EIA) forecasts indicate.
EIA expects production next year to drop by 7.8pc to 645.5mn short tons (585.6mn metric tonnes) from 699.8mn st this year, according to the latest Short-Term Energy Outlook released earlier this month.
Coal remains the largest single commodity shipped by US railroads, but increasingly it accounts for a smaller percentage of overall volume. The 645.5mn likely to be produced in 2020 would be 40pc lower than 2010’s output of 1.1bn st.
Coal generation has fallen as generators shift away from the fuel in favor of natural gas.
And now renewables are taking an increasing share of the electricity market. Coal-fired generation fell by 18.1pc across the US in April as increases in wind and solar generation pushed renewables ahead of coal for the first time on record, EIA said. US generators dispatched 60.1mn MWh of coal power during the month to the lowest level in EIA records going back to 1973. Meanwhile, renewable generation totaled 68.5mn MWh, up from a year earlier.
Coal loadings by US railroads this year through 22 June are down by 5.4pc compared with the same 25 weeks in 2018.
That is likely to continue, in part because of a drop in global coal demand that will temper the need to make deliveries to export terminals through the rest of the year. Thermal coal prices have dropped sharply, keeping most US producers out of the market. EIA expects exports this year to drop by 14.6pc to 98.7mn st from 115.6mn st in 2018. Volume will drop further next year to 93.2
Eastern rail shipments to terminals may not drop as much as deliveries to the Gulf and west coasts. Coking coal prices have been resilient relative to thermal coal and may actually increase this year and in 2020, EIA said.
Eastern railroad CSX is already benefiting from the coking coal export market with coal car loadings this year up by 3pc. Coal traffic on the other major US railroads is down.
View article here.
- On June 27, 2019