Ratings agency Moody’s downgrades US coal sector status to “negative”


Global economic ratings agency Moody’s opinion of US coal took an unexpected dive when the agency, citing an expected 3% decline in earnings in the second half of 2019, downgraded the industry’s trading rating, after reporting the sector as being stable in July.

July reports indicated that coal was likely to decline by just 11% by 2030, and has since contradicted the finding, noting that a “substantive decrease in export prices” for thermal coal, noted in regions like Europe as being behind the ratings drop, alongside a probable struggle to find buyers during the year ahead.  

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According to US Energy Information Administration, coal-powered more than 25% of the US electricity in 2018, but the fuel’s popularity and use are declining rapidly.

“A confluence of economic, environmental and social factors also increase our concerns about the industry’s longer-term demand prospects, as pressure on the industry is mounting,” reported Moody’s. “That will make “numerous coal mines uneconomic in a reduced demand environment, especially smaller, higher-cost mines that are highly vulnerable to the retirement of specific coal-fired power plants.”

Moody’s s long-term outlook for U.S. coal “calls for a substantial volume reduction over the next decade driven by utilities switching to natural gas and renewable energy.”

The firm further noted that coal contracts are sufficient in 2019, “but many have substantial open positions beyond that.”

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The country’s Energy Information Administration (EIA) has indicated that renewable energy will produce 18% of demand in 2019, and close to 20% in 2020.