Coal May Regain Market Share From Natural Gas, Barclays Says

Coal may regain some market share for power generation from natural gas during the summer as deferred shipments pour in, according to analysts from Barclays Capital Inc.

Cheap gas displaced coal for making electricity earlier in the year, leading to high stockpiles of the fuel and prompting utilities to postpone deliveries, Shiyang Wang, an analyst in New York at the bank, said today in an e-mailed research note.

“Deferred coal shipments also create an additional headwind for natural gas consumption in the U.S. power sector through the summer,” Wang wrote.

Coal producers allowed the deferred shipments in lieu of renegotiating legacy contracts and slashing prices, Barclays said. As the deliveries trickle into utilities and plants also take advantage of lower spot prices for coal, gas demand may wane, according to the investment bank.

Spot coal from Wyoming’s Powder River Basin, which holds the largest and least expensive reserves, has fallen 40 percent to $8.75 a ton from a year earlier, according to data compiled by Bloomberg.

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