Steam coal demand falls, metallurgical coal demand rises

U.S. coal production rose to 192 million short tons per quarter in the first half of 2017, from the same period in 2016, according to the U.S. Energy Information Administration. But production decreased from the second half of 2016 as a result of weaker demand for steam coal. About half of steam coal comes from Wyoming and Montana.

“Production of metallurgical coal, which is used in steel manufacturing and makes up about 8% of total U.S. coal production, increased for the third consecutive quarter,” according to the EIA. Steam coal demand accounts for more than 90% of U.S. coal production and “is driven by coal-fired electricity generation.”

In the second quarter of 2017, steam coal demand fell the most in Illinois, Kansas and Minnesota, accounting for nearly half of the decline in demand for steam coal consumption. The weaker demand led steam coal production to decline 11.7 million short tons in the quarter.

In the first half of 2017, metallurgical coal production rose to 16.8 million short tons, from 14.1 million short tons in the second half of 2016. The demand for metallurgical coal was driven especially by China, Japan and India. U.S. coal exports to the countries rose as they looked to offset disruptions in supply from Australia caused by Cyclone Debbie in April 2017. Also, demand in China has risen as steel production “reached record levels in June,” according to the National Bureau of Statistics of China.