WEEKLY COAL PRODUCTION AND PRICE REPORT 5/1/15

Commodity/Fuel Avg. BTU SO2   Price Price/mmBTU
Central Appalachia 12,500 1.2  $ 52.88  $ 2.12
Northern Appalachia 13,000 3.0  $ 60.92  $ 2.34
Illinois Basin 11,800 5.0  $ 40.77  $ 1.73
Powder River Basin   8,800 0.8  $ 11.55  $ 0.66
Uinta Basin  11,700 0.8  $ 39.82  $ 1.70
Natural Gas (Henry Hub)     n/a 0.01      n/a  $ 2.50

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

CHARLESTON — Coal production in the U.S. again finished lower this past week, terryaccording to the latest report from the Energy Information Agency (EIA) and the National Mining Association.

Production in the United States is down by 2.2 million tons (11.6%) for the week ending April 25 compared to the same time last year. Production for the week stood at 16.92 million tons compared to 19.14 million tons for the same week in 2014. Cumulative production for the year-to-date is also down sharply as of April 25 coming in at 298.36 million tons compared to 314.85 million tons last year – a decline of 16.49 million tons or 5.2%.  Production for the previous 52 weeks was also lower – finishing at 980.67 million tons compared to 113.31 million tons for the same period ending in 2014.

The number of rail car loadings was also down sharply, finishing the week down 13.2% from the same period last year. Rail car loadings are also down sharply year-to-date – off 5.2% from the same period in 2014.

Electric output was up slightly – by 1.1% for the week ending April 25 – but is down (-0.3%) year-to-date. Steel output continued its decline, down 7.3% for the week, finished at 1.71 million tons produced, with a capacity utilization factor of 76.6%, and it continues its slide year-to-date — down 6.9% to 28.12 million tons produced compared to 30.22 million tons for the same period last year. 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 and a softening of the national economy.

Looking at regional coal production the results were mixed.

The Appalachian Basin ended down for the week – at 4.61 million tons from 4.66 million tons the previous week. Interior Basin production was down for the week –finishing at 3.17 million tons from 3.20 million tons last week. Western production was also down this week, to 9.04 million tons from 9.13 million tons last week. All three basins report significant declines in production year-to-date, with Appalachia down 6.4%, the Interior Basin off 5.2% and the Western Basin down 4.7%.

Looking at the previous 52 weeks, Appalachian and Western Basin production results were down for the period ending April 25, at 2.5% and 0.1% respectively. Production in the Interior Basin is up 0.8% for the period — increasing slightly to 185.20 million tons from 183.72 million tons in 2014. Appalachian production fell to 261.93 million tons from 268.75 million tons for the same period ending in 2014. Meanwhile, Western production is down to 533.55 million tons from 533.84 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 April 23, 2015) stands at 26.68 million tons year-to-date, with 21.24 million tons produced underground and 5.44 million tons produced through surface operations. The number of mines reporting production in March fell to 93. The number of mines reporting production is subject to change as additional reports are submitted. The number of active miners working ticked upward, coming in at 15,656 compared to 15,585 last week. Underground operations had 12,706 direct mining employees while surface operations finished up at 2,950 employees. Again, we expect those numbers to change with additional reports.

Coal production in Kentucky for the week ending April 25 ticked down to 1.30 million tons compared to 1.55 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 4.9% for the previous 52 weeks, with western Kentucky fields reporting production declines of 5.2% and eastern Kentucky operations reporting declines of 4.5%.

Wyoming coal production finished down for the week to 6.53 million tons, off from 7.36 million tons for the same week in 2014 – down 12%. For the year, Wyoming production is down 0.7%. Illinois production is also down for the week, coming in at 1.03 million tons compared to 1.06 for the same period in 2014. Indiana production is down as well, coming in at 647,000 tons compared to 752,000 tons for the week in 2014. Pennsylvania production for the week is also down slightly, to 1.14 million tons versus 1.23 million tons for the same week in 2014, but is up 9.1% for the previous 52 weeks. Ohio production is off as well — dropping to 371,000 tons compared to 491,000 tons in 2014. Virginia production was also off this week – to 243,000 tons compared to 307,000 tons for the same week in 2014. Virginia production for the previous 52 weeks is off by 11.7 percent.

Coal prices on the spot market were unchanged again this week. Central Appalachian coal held steady at $52.88 per ton or $2.12 per million Btu. Northern Appalachian coal also held steady at $60.92 per ton or $2.34 per mmBtu. Illinois Basin coal prices was firm at $40.77 per ton or $1.73 per million Btu, while Powder River Basin coal was unchanged at $11.55 per ton or $0.66 per million Btu, and Uinta Basin coal prices held at $39.82 per ton, or $1.70 per million Btu.

Natural gas prices on the Henry Hub fell to $2.50 per million Btu. Natural gas producers reported an increase in their stored reserves – up 90 billion cubic feet compared to the previous week. This week’s working natural gas rotary rig count dropped to 932, from 954 last week and 1,861 a year ago. This number includes rigs working in both oil and gas plays.

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