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Coal, The Black Fuel, Struggles in 2013

By Charles Kubach, Mine-Engineer.Com
17 February, 2013






Obama and his Looney Cabinet hate coal and have shut 120 plants and mines in 2012 as a result of extreme government regulations aimed specifically at the coal and power generation industry, to curb greenhouse gasses and other fallacies. No science behind many of these decisions, simply deranged minds making arbitrary decisions, based on their uninformed opinions. And since this slate of lunatics was re-elected by a even dumber populace, the industry can expect more of the same, until some rational politicians are sent to Wathington in droves, to put some sense back into regulations and the country. It is sorely lacking, as of this date. So what does this mean for a 2013 Coal Market and the coal industry? Well let's take a look at some facts.

1. 2013 - China Imports of Metallurgical Coal (Coking Coal) is down to about 270,000,000 Metric Tons (2,200 lbs), from the 2012 high of 330,000,000 metric tons. High inventory of coal spells soft coal import market for much of 2013.

2. In the US, major coal hauler, CSX, is experiencing diminishing shipments of coal in 2013, but could hold steady if cool weather and higher gas prices continue much longer.

3. The US Government Energy Information Administration (EIA) expects coal consumption in the electric power sector to increase over the forecast period, as electricity demand and natural gas prices rise, but still remain significantly lower than the 1,003 million short tons (MMst) averaged during 2000-09. EIA expects that coal consumption in the electric power sector will be 859 MMst in 2013 and 870 MMst in 2014. EIA projects that annual nonpower-sector coal consumption will average more than 65 MMst during the forecast period, similar to the amount of consumption estimated in 2012.

EIA estimates that coal production fell by 6.9 percent in 2012. Coal production is expected to decline by an additional 1.2 percent in 2013 because primary and secondary inventory draws and a small increase in coal imports will meet growth in consumption. Coal production is forecast to grow by 2.0 percent in 2014.

EIA estimates coal exports totaled a record 124 MMst in 2012. EIA expects exports to total 108 MMst in 2013 and 112 MMst in 2014. Continuing economic weakness in Europe (which takes the most U.S. coal exports), falling international coal prices, and increasing production in other coal-exporting countries are the primary reasons for the expected decline in coal exports. U.S. coal exports could be higher if there are significant supply disruptions from any of the major coal-exporting countries. Coal exports averaged 54 Milllion standard tons during 2000-09.

Delivered coal prices to the electric power industry increased steadily over an 11-year period though 2011, when the delivered coal price averaged $2.39 per MMBtu (a 5-percent increase from 2010). EIA expects changing market conditions, including weaker domestic demand for coal and higher coal inventories, will slow increases in coal prices and contribute to the shut-in of higher-cost production. EIA estimates that the delivered coal price averaged $2.40 per MMBtu in 2012, and forecasts averaged delivered prices of $2.41 per MMBtu in 2013 and $2.45 in 2014

4. The largest US miner of coal, Peabody Energy Corporation, said U.S. coal demand rebounded sharply in the second half of 2012, while total coal use for electricity generation declined an estimated 105 million tons for the full year. Coal-fueled generation declined 13 percent in 2012, recovering losses from the 20 percent decline in the first half. Coal finished the year with a 38 percent share of U.S. electricity generation compared with a 29 percent natural gas market share.

U.S. coal production declined an estimated 70 million tons in 2012, led by an 18 percent decrease in Central Appalachia. Powder River Basin production declined 8 percent, while the Illinois Basin rose 11 percent. Forward Powder River Basin and Illinois Basin prices declined 16percent and 10 percent, respectively, in 2012. Utility coal stockpiles were approximately 185 million tons at year end, up 6 percent from prior-year levels.

Peabody projects 2013 U.S. coal consumption will increase 40 to 60 million tons from 2012 levels. After record industry-wide U.S. coal exports of 120 million tons in 2012, current year levels are expected to decline due to lower Appalachian met and thermal coal exports.

So much for the data provided by the government and companies in the industry of providing coal or transporting it. To sum it up, globally, coal is the world's fastest-growing fuel , since the cost per BTU of energy produced from coal is still the lowest from all alternatives. The Obama Administration has the idea to make all forms of energy that they do not like, i.e., fossil fuels, as expensive as they can by punitive regulations, aimed at solely increasing the price of the fuel, without logic or reason. His former Secretary of energy said many times in his ideal world, gasoline should be $10 a gallon, then wind and solar energy would be competitive. This is the mind set of Obama and his worthless staff, after all they are heading down the road to financial ruin with their spending, borrowing, and now they want to destroy the energy and power generation industry, to benefit a few leftist friends that are in the alternative energy business. Based on the record to date (Solyndra, etc.), this has been a absolute failure, as his eight years as president. will be recorded in the annals of history. Unfortunately, the Citizens of the USA and the corporations will pay a heavy price, as great economies demand large amounts of energy at a reasonable price, to succeeded.

In a market driven economy (Free Enterprise System), incentives always work better than punitive measures. Even the children's old adage, "The carrot works better than the stick" fails to be understood by the current administration. It would appear that the current administration wants the Obama Economy, since they vehmently deny they are socialists, but socialism and Obama are one in the same, as evidenced by their actions. A wise man once said, "judge liars not by their words, but only by their actions."

So, the future does not look bright, as the Inmates are in charge of the Asylum in Washington, and the damage they have done and will continue to do to this country will be immense. As for the coal industry, it will be fortunate if 2013 is a relatively flat year, with a slight downward trend in production and pricing. Fortunately, many large companies have long term contracts at a specified price for their product, so this will help their bottom line, for a while. If China's economy picks up a bit later in the year, as it is expected to do, the coal business will survive 2013, and perhaps limp into a more prosperous 2014, if the government does not do more harm to the industry. Good luck on that one.

Note: Information in sections #2 through 4 (also in Italics) are from the respective companies and/or agency.





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