United States Coal Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The coal market in the United States is expected to decline at a CAGR of more than 3% in the forecast period of 2020-2025. Despite decreasing production, the market is expected to be driven by the metallurgical, cement, and other end-user industries. Although power generation from coal-fired power plants is falling, existing thermal plants are likely to consume significant coal during the forecast period. However, the market is continuously witnessing a downfall in demand attributing to climate change policies and are focus on renewable energy sources for electricity generation.

Key Highlights

• With the decreasing share of coal in electricity generation, the share of coal in the metallurgy industry is increasing is expected to witness significant growth in the market during the forecast period.
• In 2019, the United States held 24,9537 million tons of coal reserves, which is the highest share recorded globally. With ample reserves and significant ongoing electricity generation from coal, the market is expected to create considerable opportunities in the future.
• Rising environmental concerns over greenhouse gases emissions, global warming, and shift towards renewable energy sources are expected to restrain the growth of the coal market in the United States during the forecast period.

Key Market Trends

Metallurgy Sector to Witness Significant Growth

• Around 70% of global steel production is dependent on coal. Metallurgical coal or coking coal is a vital ingredient in the steel making process. Pulverized Coal Injection (PCI) technology involves injecting coal directly into the blast furnace to provide the carbon for iron making.
• In 2019, steel production in the United States increased to 88 million metric tons in comparison to 86.6 million metric tons in 2018. Steel production is likely to drive coal consumption significantly.
• Although the steel production in the country is lower than its steel production in the early 2000s, the United States is still the 4th largest steel producer in the world, just behind China, India, and Japan.
• According to EIA, due to the COVID-19 pandemic, coal mines in the United States would produce 530 million tons in 2020 from an estimated 705 million tons in the prior year. The decline is expected due to unfavorable market factors, including slipping demand for coal-fired power generation and faltering steel and metallurgical coal demand overseas.
• The coal consumption is likely to decrease due to a decreasing share in power generation. Although post-COVID-19, with an increasing market of construction and infrastructure, steel production is expected to drive the coal demand.

Rising Environmental Concerns to Restrain the Market

• Rising environmental concerns in the United States and the world over greenhouse gas emissions from the burning of coal and global warming are expected to restrain the coal market in the country.
• Due to climate change policies, the production of coal witnessed a downfall to 14.30 EJ in 2019. The share is likely to decrease further by the end of 2020 due to market restrictions.
• In the first quarter of 2020, coal stocks grew to 175.8 MMst from 158.8 MMst at the end of the fourth quarter of 2019 (a 10.7% increase). Shares in the electric power sector increased to 145.5 MMst from 128.5 MMst at the end of the fourth quarter of 2019, the highest level since the second quarter of 2017.
• The United States metallurgical coal exports are expected to fall 32.3% in 2020 to 37.3 million tons from an estimated 55.1 million tons in 2019, according to EIA's outlook. However, post-mid-2021, the production is likely to increase, and the export is also expected to rebound.
• The decrease of coal consumption due to environmental policies and increasing renewable share, the market for coal in the United States is expected to decrease during the forecast period further.

Competitive Landscape

The United States coal market is fragmented. The major companies include Peabody Energy Corp, Arch Coal Inc, Alliance Resources Partners, L.P., NACCO Industries, Inc., and Contura Energy Inc.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support