WEEKLY COAL PRODUCTION AND PRICE REPORT 5/28/15

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  $60.90  $2.34
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.terry Production for the week ending May 23 was fully 15.7% below last year’s levels, according to the latest report from the Energy Information Agency (EIA).

Production in the United States is down by 2.98 million tons for the week ending May 23 compared to the same time last year. Production for the week stood at 16.05 million tons compared to 19.03 million tons for the same week in 2014. Cumulative production for the year-to-date is also down sharply as of May 23 coming in at 363.84 million tons compared to 390.46 million tons last year – a decline of 26.62 million tons or 6.8%.  Production for the previous 52 weeks also trended lower – finishing at 970.55 million tons compared to 986.90 million tons for the same period ending in 2014 (-1.7%).

The number of rail car loadings was also down sharply, finishing the week down 16.8% from the same period last year. Rail car loadings are also down sharply year-to-date – off 6.6% from the same period in 2014.

Electric output data was not updated this week.

Domestic steel output finished up for the week. Acording to numbers from the American Iron and Steel Institute, domestic steep production was up 1.6% for the week with a capacity utilization factor of 73.3%. However steel production continues its slide year-to-date — down 7.2% to 34.94 million tons produced compared to 37.65 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 basins reported slight increases in production over last week.
The Appalachian Basin finished at 4.40 million tons, up from 3.99 million tons last week. Interior Basin production also finished up slightly, 3.027 million tons compared to 3.023 million tons last week. Western production finished the week at 8.63 million tons from 8.61 million tons last week. All three basins continue to report significant declines in production year-to-date, with Appalachia down 8.3%, the Interior Basin off 6.1% and the Western Basin down 6.3%.

Looking at the previous 52 weeks, Appalachian and Western Basin production continued to be down for the period ending May 23,  declining 3.7% and 1.3% respectively. Meanwhile production in the Interior Basin was up 0.1% for the period — increasing slightly to 183.77 million tons from 183.54 million tons for the same period in 2014. Appalachian production fell for the period to 258.44 million tons from 268.24 million tons. Meanwhile, Western production is down to 528.34 million tons from 535.11 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 21, 2015) stands at 34.18 million tons year-to-date, with 27.40 million tons produced underground and 6.78 million tons produced through surface operations. The number of mines reporting production ticked up by one to 126. The number of mines reporting production is subject to change as additional reports are submitted. The number of active miners working, however, ticked down, coming in at 15,465 compared to 15,512 last week. Underground operations had 12,576 direct mining employees while surface operations felt to 2,889 employees. Again, we expect those numbers to change with additional reports.

Coal production in Kentucky for the week ending May 23 remained essentially unchanged from the previous week. However production was off significant from the same period in 2014.  Kentucky production for the week was reported at 1.24 compared to 1.54 million tons for the same week in 2014, with the state seeing significant declines in both its eastern and western fields year over year. Year to date, production in Kentucky is off by 9.7 percent.

Meanwhile, coal production in Kentucky is off by 5.8% for the previous 52 weeks, with western Kentucky reporting a 5.7% decline and eastern Kentucky operations reporting a decline of 6.0% year-over-year.

Wyoming coal production was up slightly for the week compared to 2014, coming in at 6.23 million tons, compared to 6.22 million tons the previous week. However that is off substantially from the 7.18 million tons produced for the same week in 2014 – a decline of 15.7%. For the previous 52 weeks, Wyoming production is down 1.9%. Illinois production also finished sharply lower for the week, coming in at 983,000 tons compared to 1.05 million tons for the same period in 2014. Indiana production is down as well, coming in at 618,000 tons compared to 747,000 tons for the week in 2014. Pennsylvania production for the week is also down sharply, to 1.09 million tons versus 1.21 million tons for the same week in 2014, but remains up 7.0% for the previous 52 weeks. Ohio production is off as well — dropping to 354,000 tons compared to 488,000 tons in 2014. Virginia production was also off this week – to 232,000 tons compared to 306,000 tons for the same week in 2014. Virginia production for the previous 52 weeks is off by 12.5 percent.

Coal prices on the spot market were unchanged this week. Central Appalachian coal held at $52.85 per ton or $2.11 per mmBtu. Northern Appalachian coal held at $60.90 per ton or $2.34 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 11 cents to $2.99 per million Btu. Natural gas producers again reported a significant increase in their stored reserves – up 112 billion cubic feet compared to the previous week, for a total of 2.1 trillion cubic feet in storage. This week’s working natural gas rotary rig count remained at 885, down from 1,860 a year ago. This number includes rigs working in both oil and gas plays.

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