EIA reviews U.S. coal supply and demand

Washington, D.C.

U.S. coal production declined in 2002 by 33.9 million short tons to end the year at 1,093.8 million short tons according to preliminary data from the Energy Information Administration (EIA) [see table], down 3.0 percent from the 2001 level of 1,127.7 million short tons. (Note: All percentage change calculations are done at the short ton level.)

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Total coal consumption rose in 2002, with the electric power sector increasing consumption by 1.7 percent, more than enough to offset the decreases in consumption experienced by most of the other sectors. Total coal stocks remained unchanged for the year. This phenomenon was a result of the electric power sector continuing to build stockpiles that had been depleted substantially during 2000, while coal producers used their stockpiles to replace some of the production shortfalls that were experienced in 2002.

The sluggish economy, coupled with the warm winter experienced over most of the country in 2002, helped to hold down demand for coal during the first half of the year. However, the warmer-than-normal summer over many parts of the nation helped to increase coal consumption for electric power generation for the year. Preliminary data show that total electricity generation increased by 3.0 percent in 2002. However, coal-based generation only increased by 1.5 percent, as it was constrained by the increased generation by hydroelectric power which rose for the first time in five years, as well as an increase in natural gas generation for the year. Coal use in the non-electricity sector declined by 6.0 percent to a level of 90.0 million short tons.

A relatively new aspect of the coal industry in the U.S. has started to show its influence on the marketplace. As a result of the Section 29 Tax Credit law, coal-synfuel plants that came into operation have begun to affect both the supply and demand sides of the coal industry. The amount of coal that is processed by these plants has increased dramatically, increasing from 49.3 million short tons in 2001, to 83.1 million short tons in 2002.

In the international markets in 2002, both U.S. coal exports and imports fell. U.S. coal exports continued in a downward trend to end 2002 at a level not seen in over 40 years. Coal exports were 39.6 million short tons, a decrease of 9.1 million short tons. U.S. coal imports declined for the first time in five years in 2002. Total coal imports were 16.9 million short tons, a drop of 2.9 million short tons.

For the first time in 20 years, the average delivered price of coal increased in all three consuming sectors as well as in the international market for a second consecutive year. The price increase ranged from 0.6 percent in the electric utility sector to 10.4 percent in the coking coal sector. The average price of export coal rose by 9.4 percent in 2002, while the price of coal imported into the U.S. increased by 4.4 percent.

For more information about coal supply and pricing in the U.S., visit www.eia.doe.gov/cneaf/ coal/page/special/feature.html.

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