US gas-to-coal switching to boost coal consumption, help trim stocks

Despite a long-term trend of coal power plant closures, and dented energy demand more recently due to the coronavirus crisis, upside for coal has been materializing in the US as gas-fired generators reacted to higher prices in the summer months and coal regained some market share lost in 2019. S&P Global Platts Analytics expects coal generation and production to ramp up through the rest of 2020. Platts Analytics projects the combination of seasonal demand patterns, recovering power demand and increasing electricity and gas prices will drive an increase in US coal consumption in the generation sector of 5-15 million st through the end of 2020, compared with 2019. Though still below 2019 levels in absolute terms, around 3 million st of additional coal consumption has been added from the apparent switch back from gas generation in August of 7-10 aGW. By the end of the year, the continued gas-to-coal switching and overall market improvements are expected to drive monthly coal consumption above 2019 levels. Coal generation had dropped to approximately 18% of total US generation during the first six months of 2020 from approximately 24% during the same period in 2019, losing share to natural gas and solar and wind… continue reading

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