WEEKLY COAL PRODUCTION AND PRICE REPORT (4/9/15)

By T.L. HEADLEY, MBA, MAT, MA

terryCHARLESTON, W.Va — Coal production in the U.S. continued to decline this past week according to the latest report from the Energy Information Agency (EIA) and the National Mining Association.

Production in the United States is down by more than 2.4 million tons for the week ending April 4 compared to the same time last year. Production for the week stood at 17.41 million tons compared to 19.75 million tons for the same week in 2014. Cumulative production for the year-to-date also remained down as of April 4 coming in at 246.54 million tons compared to 256.94 million tons last year – a decline of 4%.
Rail car loadings also continued to decline, down 11.8% for the week from the same period last year, and they are down 3.2% year-to-date.

Coal export data was not updated this week.

Electric output was up – by 0.3% for the week ending April 4 – and is down slightly (-0.5%) year-to-date. Steel output declined again for the week, down 13.7% for the week to just 1.60 million tons produced and it continues its slide year-to-date — down 6.3% to 23.15 million tons produced compared to 24.70 million tons last year. As noted previously, a decline in steel production is considered a leading indicator of the broader economy and the continued declines we are seeing in steel production usually translate into declines in durable goods orders.

Looking at regional coal production, Appalachian Basin production was down for the week – at 4.76 million tons from 4.99 million tons the previous week. Interior Basin production was also down slightly for the week – settling at 3.27 million tons from 3.42 million tons last week. Western production also finished slightly lower this week, to 9.38 million tons from 9.85 million tons last week.

The Interior and Western Basins continued to show increased production for the previous 52 weeks ending April 4. Production in the Appalachian Basin was down 1.5% for the 52-week period — to 264.12 million tons from 268.20 million tons in 2014. Interior Basin production increased 1.5% to 185.97 million tons from 183.25 million tons for the same period ending in 2014. Meanwhile, Western production was up 1%, to 536.61 million tons from 578.15 million tons in 2014.

According to the West Virginia Office of Miners’ Health, Safety and Training, coal production in the state for 2015 (reported through March 26, 2015) stands at 18.50 million tons year-to-date, with 14.58 million tons produced underground and 3.92 million tons produced through surface operations. The number of mines reporting production in February increased to 107. The number of mines reporting production is subject to change as additional reports are submitted. On a side note, the number of active miners working was reported at 15,604, down from 18,200 in January. Underground operations had 12,697 direct mining employees while surface operations dropped to just 2,907 employees. Again, we expect those numbers to change with additional reports.

Coal production in Kentucky for the week ending April 4 ticked down to 1.34 million tons compared to 1.43 for the same week in 2014, with the state seeing declines in both its eastern and western fields.

Meanwhile, coal production in Kentucky is off by 3.9% for the previous 52 weeks, with western Kentucky fields reporting production declines of 4.6% and eastern Kentucky operations reporting declines of 3.2%.

Wyoming coal production also ticked down for the week to 6.79 million tons, off from 7.65 million tons for the same week in 2014. For the year, Wyoming production is up slightly (0.3%). Illinois production is also up slightly for the week, coming in at 1.06 million tons compared to 1.11 for the same period in 2014. Indiana production is down, coming in at 675,000 tons compared to 781,000 tons for the week in 2014. Pennsylvania production for the week is also down slightly, to 1.18 million tons versus 1.26 million tons for the same week in 2014, but is up 10.8% for the previous 52 weeks. Ohio production is off as well — dropping to 311,000 tons compared to 490,000 tons in 2014. Virginia production was also off this week – to 258,000 tons compared to 321,000 tons for the same week in 2014. Virginia production for the previous 52 weeks is off by 10.9 percent.

Coal prices on the spot market continued to hold steady this week. Central Appalachian coal remains unchanged at $53.06 per ton. Northern Appalachian coal likewise, remains unchanged at $61.15 per ton. Illinois Basin coal prices held at $40.32 per ton, while Powder River Basin and Uinta Basin coal prices also held steady – at $11.55 and $38.13 per ton respectively. Coal prices have remained unchanged for the past five weeks.

Natural gas prices on the Henry Hub held steady to $2.64 per million Btu. Natural gas producers reported an increase in their stored reserves – up 12 billion cubic feet compared to the previous week. Eastern fields reported a decline of 22 billion cubic feet while all other fields saw increased gas in storage. This week’s working natural gas rotary rig count also held steady at 1028. This number includes rigs working in both oil and gas plays.

Utilities did not issue updates to their stockpile reports once again this week.

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