(EnergyAsia, January 10 2013, Thursday) — Faced with competition from cheap natural gas, US coal consumption for power generation fell to a 20-year low of 829 million short tons (mmst) in 2012, said the Energy Information Administration (EIA). In 2011, the US consumed 932.5 mmst of coal for power generation.

But that downward trend will likely reverse this year as improving natural gas prices and rising electricity demand in the US will help coal demand recover, said the agency. Natural gas prices slumped to a 10-year low of around US$1.80 per million BTU last April. For the year, the natural gas price averaged US$2.77 for a 13-year low.

With natural gas well above US$3 in recent months and holding, US coal consumption for power generation could recover to grow by 5% this year, said the EIA.

On the supply side, it expects US coal production to fall by 3.6% in 2013 after declining by 6.3% last year.

The agency expects US coal production to recover in 2014 as inventory draw slows down and domestic consumption stabilises.

US coal exports are seen falling after reaching a record 124 mmst in 2012.

“Continuing economic weakness in Europe and lower international coal prices are expected to contribute to lower coal exports in 2013. US metallurgical coal exports could be reduced if China removes an export tariff on Chinese coke, which steel producers import in lieu of metallurgical coal,” said the EIA.