Coal markets - North America short-term outlook - August 2021

Both domestic and international coal markets continue to rally under intense demand and incredibly tight supply. While a combination of high temperatures this summer, natural gas prices in the $4/mmbu range, and economic expansion has resulted in more coal-fired generation and robust coal demand in the US, miners have reported challenges increasing production to respond. Difficulties finding adequate labour has stifled efforts to deliver more tonnage. Unable to increase deliveries, generators have drawn down stockpiles at increasing rates, reportedly pulling some EGU inventories close to single-digit days of burn. As stocks erode further, EGUs will likely be forced to rely on pricey natural gas rather than deplete their stockpiles and risk a possible de-rating.