US Coal Exports Gain Momentum in a Diminishing Market

As the domestic demand for coal in the United States faces a downturn in the coming years, the US Energy Information Administration (EIA) anticipates that coal exports will play an increasingly significant role in the overall US coal consumption landscape. The recently released Short-Term Energy Outlook (STEO) from the EIA outlines expectations for US coal consumption to reach 482 million short tonnes (st) in 2024, representing a substantial 29% decline from the 2019 levels. Against this backdrop, exports are projected to constitute 19% of the total coal demand in 2024 and further increase to 21% in 2025, up from the 14% share observed in 2019. This shift is attributed to the diminishing domestic consumption, particularly within the electric power sector.

The US electric power sector is foreseen to consume 73% of US coal in 2024, followed by a slightly reduced share of 70% in 2025, compared to the higher 79% recorded in 2019. Notably, the electric power sector consumed 539 million tonnes of coal in 2019, while exports amounted to 94 million st during the same period. In the aftermath of a substantial decline in coal consumption across all sectors in 2020 due to the pandemic, the subsequent recovery in 2021 was short-lived. Total US coal consumption continued its downward trend, plummeting to 601 million st in 2022 and further to 524 million st in 2023, driven by a decline in consumption within the electric power sector.

The EIA projects a continued decline in electric power consumption of coal to 352 million st in 2024 and 322 million st in 2025. This outlook underscores the broader shift away from coal in the domestic power sector. Amidst this decline, the EIA estimates that US exports experienced an uptick, reaching around 100 million st in 2023 based on data up to October. The expectation is for exports to dip to 91 million st in 2024, followed by a modest recovery to 95 million st in 2025.

The rise in exports signifies an increased appetite for US coal in foreign markets, with a notable focus on Asia, where coal consumption was poised to reach record levels in 2023. The surge in demand for US coal is particularly prominent in the thermal coal segment in Europe and Asia, where American coal exporters have secured a foothold in the growing market. This heightened interest in US coal is partially attributed to ongoing embargoes on Russia's coal in various markets, creating opportunities for alternative suppliers. Notably, the demand for US metallurgical coal, valued for its high quality in blast furnace coking, tends to remain relatively stable in overseas markets.

The EIA envisions total coal consumption in the US to decline to 457 million st in 2025, primarily driven by lower electric power consumption. The forecast suggests that other sectors contributing to US coal consumption will either maintain marginal levels or experience relative stability during this period. This dynamic interplay of factors underscores the evolving landscape of the US coal market, with exports emerging as a pivotal component in the industry's response to shifting domestic demands and global market dynamics.