North America coal short-term outlook October 2020: How much recovery will occur this shoulder season?

The nascent recovery in domestic coal demand driven by hot summer weather and high gas prices in July and August fell apart as mild weather and lower electricity demand collapsed natural gas prices. The subsequent coal to gas displacement drove coal generation to levels 25% below 2019, year on year. By the end of October, gas prices have recovered with the return to colder weather and so has coal generation – now exceeding daily levels one year ago. Despite the increase in coal demand we expect coal production to remain flat. Domestic EGUs will end the year with stockpile levels of 129 million short tons, practically at the same level as they ended 2019. We project that natural gas prices will remain high throughout 2021 and result in a significant increase in coal generation compared to 2020. Coal production, in 2021, will increase to 620 Mst, a 11% increase over 2020, but still short of the 649 Mst of projected demand.