Demand for coal from the electric power sector is expected to increase by 84 million short tons in 2021.
Production growth is unlikely to match the increases in demand in the near term due to many coal mines operating at a reduced capacity and limited available transportation, according to the report’s findings.
In 2022, coal production is expected to increase by 34 million short tons to 622 million short tons, as the production and transportation constraints experienced in 2021 ease.
Secondary inventories of coal at electric utilities decreased in the first half of 2021, and the forecast expects this trend will continue into the second half of 2021 and 2022.
Chris Hamilton, president of the West Virginia Coal Association, said the report’s nationwide forecast is in line with what he’s been hearing from West Virginia coal producers.
“We agree, of course,” he said. “Our information indicates that coal production within the state of West Virginia is about 20 to 22% over last year’s output. We’re seeing a lot of new orders coming in, which allows people to ramp up very modestly.”
Coal supplies are currently “tight,” but market prices are favorable, Hamilton said.
“The export market is going very well,” he said. “We’ve had a better than average third quarter so far. We’re hearing reports of local shortages of coal (around the world), because of that restricted supply. The world is responding to very low output last year — basically because of COVID. As those basic supplies are being brought back to normal levels, a number of foreign countries that we ship coal to are asking for more and are desirous to use more.”