Stockpiles, not sales, met demand rise: EIA

WHILE coal consumption was up 11% year-on-year in the first quarter of the year, data from the US Energy Information Administration shows generators covered their needs by burning stockpile supply – not through buying more coal.
Stockpiles, not sales, met demand rise: EIA Stockpiles, not sales, met demand rise: EIA Stockpiles, not sales, met demand rise: EIA Stockpiles, not sales, met demand rise: EIA Stockpiles, not sales, met demand rise: EIA

Courtesy Energy Information Administration

Donna Schmidt

The federal agency said inventories of coal at power plants fell below the monthly five-year average in April for the first time since December 2011.

Behind the inventory drop is an increase in coal burn from a northern winter that was much colder overall than the one prior, along with rising natural gas prices that led some facilities to turn back to coal and move away from gas for electricity generation.

“The increase in coal consumption did not translate into increased sales by coal producers,” the EIA said in the data report.

“Receipts of coal at electric power plants actually decreased 5% between first-quarter 2012 and first-quarter 2013 as plant operators chose to meet rising demand by drawing down the historically high levels of stockpiles.”

Looking ahead into the remainder of the year, EIA experts said the producers’ weak domestic coal market was expected to continue, primarily because many generators were looking to burn down the record stocks resulting from last year’s natural gas price drop instead of purchasing additional coal supply.

Additionally, officials said, the strong 2012 market for exports of US steam and metallurgical coal had cooled off this year and would likely remain flat throughout the remainder of 2013.

In EIA’s most recent Short-Term Energy Outlook, experts forecast production would probably not rise until 2014, and at that time was projected to go up just 3% above this year’s levels.

On the positive side of that picture, officials said coal was still the fuel of choice – it continued to fuel about 40% of total generation over the past five months.

Levels are up from a low of 32% in April 2012, when natural gas prices were near 10-year lows.

Still, 40% is not 50%, the level of the generation picture coal held as recently as November 2008.

“The favorable supply and price picture for natural gas, and to some extent the increased penetration of renewable power, appears to have created a new, lower normal for the coal share of the power market,” the EIA said.

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