Increased coal demand met by burning stockpiles, not increased buys

Although total coal consumption was up 11 percent in the first quarter of 2013 compared to first quarter 2012, that increase did not result in increased sales by coal producers. According to the U.S. Energy Information Administration, receipts of coal at power plants decreased between first quarter 2012 and first quarter 2013.

“Last spring, when natural gas prices were near ten-year lows, coal consumption for electricity declined and stockpile levels increased,” the EIA stated. “Coal consumption has since increased, but most power plants are burning down the record stockpile levels rather than increase purchases of coal.”

According to the EIA, the weak domestic market for coal producers is expected to continue through 2013 as power coal-fired power plants burn down the current coal stocks rather than buy new supply.

Because of the current trend of burning through stockpiles, coal inventories at power plants dropped below the monthly five-year average in April for the first time since December 2011, according to the EIA.

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