## U.S. Energy Information Administration/Qu arterly Coal Report October - December 2010 1 

# Executive Summary

## U.S. Energy Information Administration/Qu arterly Coal Report October - December 2010 2 

## Summary

The U.S. coal industry has begun to recover from the 20 09 economic recession. While decreases in production and consumption from third quarter 2010 may suggest otherwise, these decreases ar e normal for this time of year due to the cyclical nature of U.S. demand. In fact, decreased production was as much a result of high consumer stock levels as it was a reflection of reduced demand due to mild weather. Metallurgical coal exports remained high. Production

In fourth quarter 2010, coal production decreased by 0.6 percent to 276.6 million short tons (mst) from third quarter 2010. The decrease was due to lower demand by electric utilities, which was not offset by high exports. Nevertheless, production during fourth quarter 2010 was 6.5 percent higher than production during fourth quarter 2009, which was the lowest in 14 years.

Source: Form EIA-7A, "Coal Production and Preparation Report."



## Production in the Western Region of U.S., 152.1 mst, decreased slightly (0.7 percent) from third quarter 2010. Conversely, it increased significantly (6.5 percent) from fourth quarter 2009. Fourth quarter production in Wyoming, in particular, decreased by 1.0 percent to 114.6 mst from the preceding qu arter, while showing an increase of 8.4 percent from the same quarter in 2009. Producers in this region, however, have limited access to foreign markets due to the lack of coal export facilities on the West Coast.

Fourth quarter production in the Appalachian Region increased by 0.6 percent to 83.4 mst from the preceding quarter and was 3.0 percent higher than the same quarter in 2009. While demand from foreign nations, namely China and India, had a positive impact on production, the rising costs of mining due to new safety regulations, a shortage of skilled labor, and a slowdown of permits for surface mining operations limited production growth in this region.

Production in the Interior Region decreased from third quarter 2010, falling 1.9 percent to 40.4 mst, but increased by 14.3 percent from the same quarter in 2009. Clearly, production constraints in the Appalachian Region have affected the price of coal from the region and caused a shift in demand from the Appalachian Region to the Illinois Basin in the Interior Region and to the Western Region since fourth quarter 2009.

Exports and Imports

Total coal exports decreased by 1.0 percent to 20.9 mst from third quarter 2010, but increased by 18.2 percent from the same quarter in 2009. Export demand grew in 2010 due to heavy rains and flooding, which disrupted mining and the transportation of coal in Australia, Indonesia, and Colombia.

Higher exports were driven primarily by demand for metallurgical coal by China. Total exports to China accounted for 8.3 percent of to tal U.S. coal exports, an increase of 4.0 percentage points from the same quarter in 2009. Accelerated exports to China prompted other Asian nations to purchase coal to increase their stockpiles

.

Source: Exports: Bureau of the Census, U.S. Department of Commerce, "Monthly Report EM 545;" and Imports: Bureau of the Census, U.S. Department of Commerce, "Monthly Report IM 145."



## Metallurgical coal exports increased to 13.3 mst, reflecting an increase of 1.8 percent and 11.8 percent from the preceding quarter and the same quarter in 2009, respectively. Fourth quarter exports to China totaled an

## U.S. Energy Information Administration/Qu arterly Coal Report October - December 2010 3 

## estimated 1.5 mst, an increase of 0.8 mst from the same period in 2009.

Steam coal exports were 5.4 percent less than the third quarter 2010 but 31.5 perc ent greater than the same quarter in 2009. U.S. steam coal exports to South Korea, China, and India grew exponentially while exports to the U.K. declined by 23.6 percent from the same quarter in 2009.

Source: Bureau of the Census, U.S. Department of Commerce, "Monthly Report EM 545.”



## The U.S. imported 4.8 mst of coal during the fourth quarter, which was an increase of 2.8 percent from third quarter 2010. However, imports were 11.7 percent less than in the fourth quarter of the previous year and 47.3 percent below fourth quarter 2008.

Consumption

Total U.S. coal consumption decreased from third quarter 2010 and from the same quarter in 2009 by 12.6 and 0.9 percent, respectively. Consumption was the lowest since the same quarter in 1995. While Industrial Sector users increased consumption from the same quarter in 2009 and third quarter 2010, coke plants utilized less coal in comparison to the third quarter 2010 and higher volumes of coal in comparison to the same quarter in 2009. Increases in consumption from fourth quarter 2009 reflect some recovery from the 2009 recession.

Commercial and Institutional Us ers, however, increased coal consumption from third quarter 2010, but reduced consumption from the same quarter in 2009. Consumption by these users is affected by weather patterns. Hence, the decrease in consumption from fourth quarter 2009 is the consequence of milder weather in fourth quarter 2010 relative the weather in fourth quarter 2009.

The Electric Power Sector has been and continues to be the largest consumer of U.S. coal. Accounting for 92.6 percent of U.S. coal cons umed, Electric Power Sector consumption in last quarter 2010 decreased by 13.5 percent from third quarter 2010 and by 1.8 percent from the same quarter in the previous year. Weather patterns play a major role in electricity consumption and as a result affect coal consumption by the Electric Power Sector. Therefore, milder weather in fourth quarter 2010 relative the weather in fourth quarter 2009 caused a decrease in consumption relative to fourth quarter 2009. Third quarter months, July, August and September, are traditionally the warmest months of the year. During these months, the frequent use of air conditioners result in high consumption of electricity while the cooler months of October and November require less air conditioning and less heating relative to the colder months of January and February.

Average U.S. temperatures , October - December 2010

Source: National Oceanic and Atmospheric Administration, “Divisional Temperature Ranks.”



## Domestic Prices

The average price of coal de livered to the electric power sector increased by 4.2 percent from December 31, 2009 to $2.22 per million Btu onDecember 31, 2010. The average quarterly price of $2.24 per million Btu during fourth quarter 2010 represente d an increase relative to the average quarterly price of fourth quarter 2009 when it was $2.14 per million Btu. Delivered prices are the weighted average of contract and spot prices. According to EIA estimates, 80 percent of coal is delivered under contract terms and 20 percent is delivered under spot terms. For more information on spot and delivered price data, see Table 4.10.A in the Electric Power Monthly at

## U.S. Energy Information Administration/Qu arterly Coal Report October - December 2010 4 

## www.eia.doe.gov/cneaf/electricity/epm/epm_sum.html and http://www.eia.gov/FTPROOT/features/uscoal.pdf

. Historical average weekly coal commodity spot prices (2008 Q4 – 2010 Q4)

Source: With permission, Platts Coal Outlook, “Weekly Price Survey.” For more information, see www.eia.doe.gov/cneaf/coal/page/coalnews/coalmar.html

. 

## Stocks Consumer stocks increased to 182.2 mst from 169.7 mst in third quarter 2010. While last quarter 2010 stocks were an estimated 7.6 percent below last quarter 2009 stocks, they are well above th e 5-year average of 157.2 mst for the same period. It appears that stock levels in the Electric Power and Industri al sectors have begun to return to pre-recession levels. Stocks held by coke plants have remained consistent with levels reported in previous years for the same quarter.

## U.S. Energy Information Administration/Qu arterly Coal Report October - December 2010 5 

## Table ES-1. U.S. Coal Summary Statistics, 2004-2010 (Thousand Short Tons)

Year and Quarter Production 1 Imports Waste Coal Supplied Producer and Distributor

Stocks 2 Consumption Exports Consumer Stocks 2 Losses and Unaccounted For 3

2004 January - March ............................ 275 , 492 5 , 326 2 , 620 39 , 305 276 , 117 9 , 688 118 , 317 Ap ril - June ................................... 274 , 335 6 , 853 2 , 320 40 , 698 260 , 315 15 , 255 125 , 893 Jul y - Sep tembe r ........................... 281 , 484 7 , 804 2 , 441 39 , 425 292 , 531 12 , 203 112 , 263 October - Decembe r ..................... 280 , 787 7 , 297 3 , 919 41 , 151 278 , 292 10 , 852 112 , 855 Total ............................................. 1 , 112 , 099 27 , 280 11 , 299 1 , 107 , 255 47 , 998 6 , 887 2005 January - March ............................ 285 , 802 7 , 607 3 , 208 38 , 698 278 , 274 10 , 129 111 , 577 Ap ril - June ................................... 278 , 793 7 , 233 3 , 090 38 , 422 263 , 732 14 , 803 123 , 005 Jul y - Sep tembe r ........................... 285 , 293 7 , 832 3 , 828 34 , 965 303 , 668 12 , 620 106 , 191 October - Decembe r ..................... 281 , 610 7 , 788 3 , 227 34 , 971 280 , 303 12 , 390 109 , 333 Total ............................................. 1 , 131 , 498 30 , 460 13 , 352 1 , 125 , 978 49 , 942 9 , 092 2006 January - March ............................ 289 , 145 8 , 958 3 , 613 35 , 113 272 , 730 10 , 659 120 , 013 Ap ril - June ................................... 292 , 416 7 , 956 3 , 363 35 , 307 261 , 207 12 , 590 144 , 228 Jul y - Sep tembe r ........................... 289 , 792 10 , 399 3 , 787 33 , 170 300 , 677 13 , 540 135 , 782 October - Decembe r ..................... 291 , 397 8 , 933 3 , 646 36 , 548 277 , 677 12 , 858 150 , 398 Total ............................................. 1 , 162 , 750 36 , 246 14 , 409 1 , 112 , 292 49 , 647 8 , 824 2007 January - March ............................ 286 , 041 8 , 786 3 , 264 34 , 007 278 , 727 11 , 139 149 , 588 Ap ril - June ................................... 285 , 687 8 , 405 3 , 387 32 , 484 267 , 106 14 , 702 162 , 849 Jul y - Sep tembe r ........................... 286 , 035 10 , 559 3 , 697 30 , 090 303 , 665 16 , 198 150 , 448 October - Decembe r ..................... 288 , 872 8 , 597 3 , 727 33 , 977 278 , 500 17 , 124 158 , 781 Total ............................................. 1 , 146 , 635 36 , 347 14 , 076 1 , 127 , 998 59 , 163 4 , 085 2008 January - March ............................ 289 , 015 7 , 640 3 , 453 34 , 876 284 , 984 15 , 802 153 , 225 Ap ril - June ................................... 284 , 331 8 , 982 3 , 420 32 , 086 267 , 304 23 , 069 159 , 760 Jul y - Sep tembe r ........................... 298 , 911 8 , 485 3 , 672 31 , 354 299 , 022 20 , 321 151 , 596 October - Decembe r ..................... 299 , 552 9 , 101 3 , 601 34 , 688 269 , 237 22 , 329 170 , 424 Total ............................................. 1 , 171 , 809 34 , 208 14 , 146 1 , 120 , 548 81 , 519 5 , 740 2009 January - March ............................ 282 , 772 6 , 325 3 , 321 41 , 257 254 , 383 13 , 335 182 , 169 Ap ril - June ................................... 263 , 017 5 , 426 3 , 220 44 , 018 231 , 110 12 , 951 202 , 994 Jul y - Sep tembe r ........................... 269 , 339 5 , 441 3 , 567 41 , 690 259 , 621 15 , 159 204 , 422 October - Decembe r ..................... 259 , 796 5 , 447 3 , 558 47 , 718 252 , 363 17 , 653 197 , 062 Total ............................................. 1 , 074 , 923 22 , 639 13 , 666 997 , 478 59 , 097 14 , 985 2010 January - March ............................ 265 , 317 4 , 803 3 , 269 50 , 153 E 264 , 581 17 , 807 183 , 977 Ap ril - June ................................... 265 , 132 5 , 058 3 , 443 48 , 667 E 247 , 418 21 , 965 187 , 810 Jul y - Sep tembe r ........................... 278 , 205 4 , 680 3 , 721 42 , 430 E 286 , 149 21 , 074 169 , 696 October - Decembe r ..................... 276 , 627 4 , 811 3 , 429 42 , 151 E 250 , 147 20 , 870 182 , 164 Total ............................................. 1 , 085 , 281 19 , 353 13 , 862 1 , 048 , 295 81 , 716 8 , 950

###  1 Includes refuse recovery. 2 Reported as of the last day of the quarter. 3 "Losses and Unaccounted For" is calculated as production plus imports plus waste coal supplied minus the change in producer an d distributor stocks minus consumption minus exports minus the change in consumer stocks.

EEstimated Note:  Total may not equal sum of components because of independent rounding. Beginning with 1999, the first three quarters of Producer and Distributor Stocks data for each year are estimated. Sources:  Production: All Years and Quarters - Mine Safety and Health Administration, U.S. Department of Labor, Form 7000-2, "Quarterly Mine Employment and Coal Production Report"  Imports: All Years and Quarters - Bureau of the Census, U.S. Department of Commerce, "Monthly Report IM 145"  Waste Coal Supplied: 2004-2007 - U.S. Energy Information Administration (EIA), Form EIA-906, "Power Plant Report," Form EIA-920, "Combined Heat and Power Plant Report," and Form EIA-3, "Quarterly Coal Consumption and Quality Report - Manu facturing and Transformation/Processing Co al Plants and Commercial and Institutional Coal Users;" 2008-Forward, Form EIA923, "Power Plant Operations Report," and Form EIA-3, "Quarterly Coal Consumption and Quality Report - Manufacturing and Transf ormation/Processing Coal Plants and Commercial and Inst itutional Users"  Producer and Distributor Stocks: 2004-2007 - "Short-Term Ener gy Outlook" estimates and Form EIA-6A, "Coal Distribution Report ;" 2008-Forward - "Short-Term Energy Outlook" estimates, Form EIA-7A, "Coal Production Report," and Form EIA-8A, "Coal Stocks Repo rt"  Exports: All Years and Quarters - Bureau of the Census, U.S. Department of Commerce, "Monthly Report EM 545"  Consumption: 2004-2007 - EIA, Form EIA-906, "Power Plant Report," and Form EIA920, "Combined Heat and Power Plant Report; Form EIA-3, "Quarterly Coal Consumption and Quality Report - Manufacturing and Tran sformation/Processing Coal Plants and Commercial and Institut ional Coal Users," Form EIA-5, "Quarterly Coal Consumption and Quality Report - Coke Plants," Form EIA-7 A, "Coal Production Report," and Form EIA-6A, "Coal Distribution Report;" 2008-Forward - Form EIA-923, "Power Plant Operations Report," Form EIA-3, "Quarterly Coal C onsumption and Quality Report - Manufacturing and Transformation/Processing Coal Plants and Commer cial and Institutional Coal Users," Form EIA-5, "Quarterly Co al Consumption and Quality Report - Coke Plants," and Form EIA-7A, "Coal Production Report."  Consumer Stocks: 2004-2007 - EIA, Form EIA-906, "Power Plant Report," Form EIA-920, "Combined Heat and Power Plant Report;" Form EIA-3, "Quarterly Coal Consumption and Quality Report - Manufacturing and Transformation/Processing C oal Plants and Commercial and Institutional Coal Users," and Form EIA-5, "Quarterly Coal Consumption and Quality Report - Coke Plants;" 2008-Forward - Form E IA-923, "Power Plant Operations Report," Form EIA-3, "Quarterly Coal Consumption and Quality Report - Manufacturing and Transformation/Processing Coal Plants and Commercial and InstitutionalCoal Users," and Form EIA-5, "Quarterly Coal Consumption and Quality Report - Coke Plants."

## U.S. Energy Information Administration/Qu arterly Coal Report October - December 2010 6 

## Table ES-2. U.S. Coke Summary Statistics, 2004-2010 (Thousand Short Tons)

Year and Quarter Production Imports Producer and Distributor

Stocks 1 Consumption 2Exports

2004 January - March ................................. 4 , 185 1 , 006 349 5 , 137 86 Ap ril - June ........................................ 4 , 224 3 , 628 320 7 , 518 363 Jul y - Sep tembe r

................................ 4 , 241 1 , 043 317 4 , 825 462 October - Decembe r

.......................... 4 , 258 1 , 196 351 5 , 012 408 Total .................................................. 16 , 909 6 , 873 22 , 492 1 , 319 2005 January - March ................................. 3 , 959 1 , 608 393 5 , 236 288 Ap ril - June ........................................ 4 , 338 974 662 4 , 562 481 Jul y - Sep tembe r

................................ 4 , 291 441 784 4 , 127 483 October - Decembe r

.......................... 4 , 132 507 614 4 , 314 495 Total .................................................. 16 , 719 3 , 529 18 , 239 1 , 747 2006 January - March ................................. 4 , 115 675 470 4 , 755 178 Ap ril - June ........................................ 4 , 102 939 419 4 , 664 427 Jul y - Sep tembe r

................................ 4 , 128 1 , 402 495 4 , 825 629 October - Decembe r

.......................... 4 , 059 1 , 052 685 4 , 539 383 Total .................................................. 16 , 404 4 , 068 18 , 784 1 , 616 2007 January - March ................................. 4 , 000 454 717 4 , 078 343 Ap ril - June ........................................ 4 , 083 685 767 4 , 428 291 Jul y - Sep tembe r

................................ 4 , 063 521 637 4 , 371 344 October - Decembe r

.......................... 4 , 055 800 632 4 , 394 466 Total .................................................. 16 , 201 2 , 460 17 , 270 1 , 444 2008 January - March ................................. 4 , 036 850 478 4 , 723 316 Ap ril - June ........................................ 3 , 810 1 , 243 505 4 , 559 466 Jul y - Sep tembe r

................................ 4 , 107 998 464 4 , 494 653 October - Decembe r

.......................... 3 , 694 512 916 3 , 229 524 Total .................................................. 15 , 646 3 , 603 17 , 006 1 , 959 2009 January - March ................................. 3 , 147 67 1 , 563 2 , 332 235 Ap ril - June ........................................ 2 , 387 79 1 , 731 1 , 989 309 Jul y - Sep tembe r

................................ 2 , 679 71 1 , 189 2 , 941 351 October - Decembe r

.......................... 2 , 930 130 776 3 , 061 411 Total .................................................. 11 , 143 347 10 , 323 1 , 307 2010 January - March ................................. 3 , 433 365 702 3 , 588 285 Ap ril - June ........................................ 3 , 810 448 629 4 , 029 300 Jul y - Sep tembe r

................................ 3 , 971 330 721 3 , 920 290 October - Decembe r

.......................... 3 , 808 71 702 3 , 310 587 Total .................................................. 15 , 022 1 , 214 14 , 847 1 , 463

###  1 Reported as of the last day of the quarter. 2 Consumption is equal to production plus imports minus th e change in producer and distributor stocks minus exports. Note:  Total may not equal sum of components because of independent rounding. Sources:  Production, Consumption, and Producer and Distributor Stocks: U.S. Energy Information Administration (EIA), Form EIA-5, "Quarterly Coal Consumption and Quality Report - Coke Plants"  Imports: Bureau of the Census, U.S. Department of Commerce, "Monthly Report IM 145"  Exports: Bureau of the Census, U.S. Department of Commerce, "Monthly Report EM 545."