(EnergyAsia, August 14 2012, Tuesday) — US coal consumption for power generation will fall to 825 million short tons (MMst) in 2012, their lowest level in 20 years, predicts the US Energy Information Administration (EIA).

With natural gas prices expected to remain cheap, power companies will continue to snub coal through next year, said the agency in its latest short-term energy outlook published earlier this month.

It noted that power‐sector coal consumption, which averaged over one billion MMst annually from 2003 through 2008, fell by 46 million short tons (MMst) in 2011.

In response to weak demand, the EIA expects coal miners to reduce production by 7% in 2012 and by a further 4% next year.

At the same time, the miners will step up exports, with this year’s sales, mostly to Asian customers, expected to reach 116 MMst compared with last year’s 107 MMst.

However, the EIA expects US coal exports to fall sharply by 16% in 2013 on account of China’s slowing economy and high coal stockpiles, as well as increased exports from Indonesia and Australia.

Still, these levels are far higher than the annual average exports of around 56 MMst in the decade preceding 2011.

Amid bearish fundamentals, the EIA expects US coal prices for power generation to fall to US$2.36 per MBtu for 2013. It expects this year’s coal prices to edge up to US$2.41 per MMBtu from last year’s average of US$2.40 per MMBtu.

Delivered coal prices to the power industry had increased steadily over the last 10 years.