April 19th, 2013
US coal consumption by the electric power sector in 2013 will grow by 60 million-80 million st over last year’s level, based on “strong” first-quarter demand, St. Louis-based producer Peabody Energy said Thursday.
Energy Information Administration data shows US generators consumed 824.8 million st in 2012 and the agency forecasts the sector will consume 885.2 million st this year.
“First-quarter US coal demand saw strong improvement over the prior year as generators switch back to coal and away from higher-priced natural gas in key regions,” CEO Gregory Boyce said in a statement.
“We now expect that during 2013, coal will recapture the vast majority of its 2012 demand that was lost to natural gas.”
Peabody, which released its first quarter earnings Thursday, said US coal demand rose 8% year-on-year in the first quarter and accounted for about 40% of total electricity generation.
Natural gas prices are more than double prior-year levels, “leading to gas-to-coal switching that drove an 11% decline in natural gas generation,” the company said.
Peabody said the gas-to-coal trend “accelerated in March, when US coal generation rose 15%, while gas generation fell 16%.”
Peabody said it expects “sharply favorable year-over-year coal demand increases to continue in the second quarter.”
It added that coal shipments to utilities fell 10% in the first quarter, “leading to an above-average customer stockpile drawdown.
Powder River Basin and Illinois Basin customer inventories have now dropped approximately 20% below prior-year levels on a days-burn basis, and are on a pace to return to normal later this year,” it said.
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