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Positive comments were few and far between at this year's Coaltrans USA con- ference held in Miami February 6-7. While presenters offered some optimism on the U.S. thermal coal side — with a harsh win- ter leading to an increase in coal produc- tion — discussions regarding seaborne met coal dealt with its numerous chal- lenges including oversupply, the strength of the U.S. dollar versus the Australian dol- lar, environmental and taxation regula- tions, and future growth areas. In the keynote address, Paul Reagan, president of Sampling Associates International, echoed these somber senti- ments and took a cue from his teenage daughter when describing the current situ- ation. "We are here today to ponder the great questions of our industry," Reagan said. "How much does it suck? Why will it suck? And how long will it suck?" His remarks were met with laughter, but all in attendance knew the seriousness of the questions. Some of the main concerns for the coal industry are environmental regulations and taxation, the weak Australian dollar, and the future of China, Reagan said. However, he said, "Where there are chal- lenges, there are always opportunities." Thermal Coal Tightens The rise of shale gas, environmental poli- cies and plant economics have limited the prospects for coal's longer term growth domestically, according to Bob Stall, prin- cipal for Ernst and Young. Retirements of coal-fired plants are far outpacing new additions. However, new state-of-the-art plants, clean coal tech- nologies and exports offer a viable option for coal suppliers, he said. According to Nathan Flesher, director of operations for McKinsey and Co., the out- look for U.S. thermal coal is moderate. Domestically, it is demand constrained until 2030, he added. However, due to the polar vortex, or as Kevin Crutchfield, chairman and CEO of Alpha Natural Resources, jokingly called " w i n t e r , " n a t u r a l g a s p r i c e s r o s e a n d thermal coal had to step in and fulfill the demand for electricity. "All this is a simple reminder to regula- tors that having all your eggs in one basket is just a recipe for scrambled eggs," Crutchfield said. W i t h n a t u r a l g a s p r i c e v o l a t i l i t y , i n c l u d i n g s h o r t - t e r m s p i k e s , m a n y plants have switched back to coal-fired g e n e r a t i o n , s a i d S t a l l . I n 2 0 1 3 , c o a l regained some of the market share that w a s l o s t t o n a t u r a l g a s i n 2 0 1 2 w h e n c oa lt r a n s u sa r e c a p B Y J E N N I F E R J E N S E N , A S S I S T A N T E D I T O R Coal Experts Review Current Market Forces Improved domestic steam markets offset weaker met pricing abroad Figure 1: Electricity generation in OECD and non-OECD countries. 42 www.coalage.com March 2014 Figure 2: U.S. coal exports continue to grow with Europe, the prime recipient, due to proximity. (Source: Ernst and Young) CA_pg42-45_V2_CA_pg46-47 3/12/14 8:49 AM Page 42