WEEKLY COAL PRODUCTION AND PRICE REPORT 5/25/15

Coal Commodity Region/Fuel Avg. BTU SO2 Price  Price/mmBTU
Central Appalachia 12,500 1.2  $52.85  $2.11
Northern Appalachia 13,000 3  $58.90  $2.27
Illinois Basin 11,800 5  $40.45  $1.71
Powder River Basin   8,800 0.8  $11.55  $0.66
Uinta Basin 11,700 0.8  $39.30  $1.68
Natural Gas (Henry Hub)     n/a 0.01     n/a  $2.72

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

CHARLESTON — Coal production in the U.S. continued to fall this past week. Production for the week ending May 15 was fully 14.2% below last year’s levels, according to the latest report from the Energy Information Agency (EIA) and the National Mining Association.

Production in the United States is down by 2.66 million tons for the week ending May 15 compared to the same time last year. Production for the week stood at 16.28 million tons compared to 18.69 million tons for the same week in 2014. Cumulative production for the year-to-date is also down sharply as of May 15 coming in at 347.78 million tons compared to 371.47 million tons last year – a decline of 23.69 million tons or 6.4%.  Production for the previous 52 weeks also trended lower – finishing at 973.53 million tons compared to 986.40 million tons for the same period ending in 2014 (-1.3%).

The number of rail car loadings was also down sharply, finishing the week down 15.3% from the same period last year. Rail car loadings are also down sharply year-to-date – off 6.1% from the same period in 2014.

Electric output was down slightly – by 0.62% for the week ending May 15 – and also down slightly (-0.3%) year-to-date. Steel output continued its decline, down 8.3% for the week, finished at 1.71 million tons produced, with a capacity utilization factor of 72.1%, and it continues its slide year-to-date — down 7.2% to 33.21 million tons produced compared to 35.79 million tons for the same period last year. As noted in previous reports, production is a strong indicator of the status of the broader economy and the continued declines we are seeing point to declines in durable goods orders and a softening of the national economy in the near- to mid-term.

In terms of regional coal production, all three major basins reporting essentially unchanged production from the previous week.

The Appalachian Basin held steady for the week – at 4.39 million tons. Interior Basin production was also unchanged for the week –finishing at 3.02 million tons. Western production was down slightly this week, to 8.61 million tons from 8.62 million tons last week. All three basins continue to report significant declines in production year-to-date, with Appalachia down 7.8%, the Interior Basin off 5.8% and the Western Basin down 5.8%.

Looking at the previous 52 weeks, Appalachian and Western Basin production continued to be down for the period ending May 15,  declining 3.3% and 0.9% respectively. Meanwhile production in the Interior Basin was up 0.4% for the period — increasing slightly to 184.21 million tons from 183.52 million tons for the same period in 2014. Appalachian production fell for the period to 259.44 million tons from 268.27 million tons. Meanwhile, Western production is down to 529.88 million tons from 534.61 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 May 14, 2015) stands at 33.31 million tons year-to-date, with 27.01 million tons produced underground and 6.29 million tons produced through surface operations. The number of mines reporting production remained steady at 125. The number of mines reporting production is subject to change as additional reports are submitted. The number of active miners working ticked down, coming in at 15,512 compared to 15,624 last week. Underground operations had 12,604 direct mining employees while surface operations finished up at 2,908 employees. Again, we expect those numbers to change with additional reports.

Coal production in Kentucky for the week ending May 15 dropped to 1.23 million tons compared to 1.51 for the same week in 2014, with the state seeing significant declines in both its eastern and western fields.

Meanwhile, coal production in Kentucky is off by 5.5% for the previous 52 weeks, with both western Kentucky and eastern Kentucky operations reporting declines of 5.5% year-over-year.

Wyoming coal production was also significantly down for the week compared to 2014, coming in at 6.22 million tons, off from 7.18 million tons – or a decline of 13.4%. For the previous 52 weeks, Wyoming production is down 1.5%. Illinois production also finished sharply lower for the week, coming in at 982,000 tons compared to 1.03 million tons for the same period in 2014. Indiana production is down as well, coming in at 617,000 tons compared to 734,000 tons for the week in 2014. Pennsylvania production for the week is also down sharply, to 1.09 million tons versus 1.20 million tons for the same week in 2014, but remains up 7.6% for the previous 52 weeks. Ohio production is off as well — dropping to 353,000 tons compared to 479,000 tons in 2014. Virginia production was also off this week – to 232,000 tons compared to 300,000 tons for the same week in 2014. Virginia production for the previous 52 weeks is off by 12.2 percent.

Coal prices on the spot market remained mostly steady this week. Central Appalachian coal held at $52.85 per ton or $2.11 per mmBtu. Northern Appalachian dipped $2.00 per ton to $59.90 from $60.90 per ton or $2.27 per mmBtu. Illinois Basin coal prices were firm at $40.45 per ton or $1.73 per mmBtu, while Powder River Basin coal remained steady at $11.55 per ton or $0.66 per mmBtu, and Uinta Basin coal prices were unchanged at $39.30 per ton or $1.70 per mmBtu.

Natural gas prices on the Henry Hub finished the week up 13 cents to $2.88 per million Btu. Natural gas producers again reported a significant increase in their stored reserves – up 111 billion cubic feet compared to the previous week, for a total of 1.9 trillion cubic feet in storage. This week’s working natural gas rotary rig count dropped to 885, from 888 last week and 1,860 a year ago. This number includes rigs working in both oil and gas plays.

About the Author: T.L. Headley is an award-winning, veteran public relations professional and former business journalist. He has more than 23 years of experience in mass communications, including service as managing editor of several newspapers, senior writer for a business journal, director of public relations for two major state agencies as well as managing the public relations and communications for the largest state coal mining trade association in the nation, and as an independent public relations consultant.

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