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US 2012 coal output forecast cut, raised for 2013

6 Nov 2012, 8.10 pm GMT

Washington, 6 November (Argus) — The Energy Information Administration (EIA) lowered its US coal production outlook for 2012 but raised next year's estimate, reinforcing the view that markets are unlikely to improve until 2013.

The agency expects nationwide coal production to fall 6.8pc this year to 1.021bn short tons (926mn metric tonnes), the lowest level since 1993 and slightly below last month's estimate of 1.027bn for 2012, EIA said in its latest Short-Term Energy Outlook.

Output next year is projected to remain steady at 1.02bn, up slightly from an October estimate of 1.015bn.

The improved outlook for 2013 stems from expectations for US natural gas prices to climb, which could reduce coal-to-gas switching by utilities. EIA forecasts Henry Hub spot gas prices will average $3.49/mmBtu next year, higher than last month's estimate of $3.35/mmBtu and well above the forecasted 2012 average of $2.77/mmBtu.

US power sector coal consumption is on track to fall almost 12pc this year to 825.1mn st, but is projected to grow by around 6pc in 2013 to 870.9mn st. EIA last month saw coal burns totaling 826.7mn st in 2012 and 865.9mn st in 2013.

The numbers are well below the more than 1bn st/yr levels reached in 2003-2008. Demand displacement by natural gas, lower industrial coal consumption and efficiency gains have weighed on US coal burns, shifting more supply into seaborne markets.

EIA still expects total US coal exports to reach a record 125mn st in 2012, up from 107mn st in 2011. Next year, exports are forecast to slip to around 107mn st assuming no major supply disruptions from other key exporting countries.

“Continuing economic weakness in Europe, lower international coal prices and increasing production in Asia are primary reasons for the expected decline in coal exports,” EIA said.

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