Coal Age

JAN-FEB 2019

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20 www.coalage.com January/February 2019 forecast survey 2019 US Coal Sector Realizes the New Norm Exports will help offset further declines in western production by steve fiscor, editor-in-chief Ask American coal operators what they think and the responses will differ greatly depending on their location. A large sur- face mine operator in Wyoming would likely tell you they plan to mine and ship less coal in 2019. They will still ship a lot by eastern U.S. standards, but it will like- ly be less than last year. An underground operator in the East producing high-qual- ity bituminous coal could probably mine and sell more coal, but they will likely tell you they are constrained by production capacity and logistics as far as getting more product to market. As it does every year, Coal Age sur- veyed 500 professionals involved in dif- ferent aspects of coal mining and pro- cessing for its 2019 Annual Forecast. The feeling one would get from the respon- ses is that they are cautiously optimis- tic. Most of them believe production will increase or at least stay the same. They have money to invest in projects if they can show a return on investment. They are looking at more new equipment rather than upgrades. While one could look at the 22-mil- lion-ton drop in total production be- tween 2018 and 2017 and wonder if this is the beginning of the end, they would be mistaken. There are positive market signals if one searches for them, and Coal Age believes 750 million tons per year may be the new norm moving for- ward. For that to happen, however, coal operators would have to find a way to offset the 15 million tons to 20 million tons of reduced western U.S. production that has already been announced. It could happen, but a number of things would have to work in coal's favor. First, power generation and steel pro- duction would need to continue to grow. Utilities would have to begin rebuilding stockpiles, which could account for pro- duction figures exceeding normal de- mand levels. The prices for coal would have to remain high enough to allow the investment in additional capacity. U.S. coal operators would have to export more coal and the potential exists. The New Norm During 2018, U.S. coal production de- clined 22 million tons (or 2.8%) to 750 million tons from 772 million tons in 2017 (see Monthly Stats from Coal Coun- try, p. 7). Almost all that lost production can be attributed to Wyoming and Texas. Wyoming posted the largest loss, 14 mil- lion tons, with total production declin- ing to 301 million tons from 315 million tons in 2017 or 4.5%. Coal production in Texas dropped nearly 10 million tons from 36.2 million tons in 2017 to 26.7 million tons in 2018. For many years, Texas was ranked among the top five coal-producing states. East of the Mississippi River, the story is different. With the exception of Figure 1 — Production, Consumption and Attitude This year, Coal Age received 49 responses from 500 executive surveys

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