According to the EIA outlook, the share of coal in the electric power industry is expected to grow to almost 40% by 2014. The expected rise in demand for electricity in 2013 is likely to push up the demand for coal.
As the price of natural gas continues to rise in upcoming months, this will contribute to the rise in price of coal. The price for natural gas is likely to range between $3 and $4, which is historically low but not as low as it was at the first half of 2012. The demand for natural gas in the power sector will slowly rise in the years to come, but coal will remain the prime energy source for generating electricity in the U.S. and abroad. This will keep the price of coal from further falling and thus maintain this industry in the years to follow.
The drop in natural gas prices at the beginning of 2012 was the key factor for the decline in demand for coal, but as natural gas prices remain higher than their 2012 low rates, this will rebound the demand for coal. Moreover, as the demand for electricity will also increase due to the housing boom and population growth this will contribute to the growth in demand for coal. This means the coal industry isn’t done, and will rally! Enjoy!