WEEKLY COAL PRODUCTION AND PRICE REPORT 6/04/15: U.S. Coal Production Continues Sharp Decline

Coal Commodity Region/Fuel          Avg. BTU SO2 Price  Price/mmBTU
Central Appalachia              12,500 1.2  $52.75  $  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  $2.78

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

CHARLESTON — Coal production in the U.S. continued to fall this past week. Productionterry for the week ending May 29 was fully 6.1% below last week’s production figures and 20.7% below last year’s levels, according to the latest report from the Energy Information Agency (EIA).

Production in the United States is down by 4.02 million tons for the week ending May 29 compared to the same time last year. Production for the week stood at 15.07 million tons compared to 19.01 million tons for the same week in 2014 and was off 900,000 tons from the previous week. Cumulative production for the year-to-date is also down sharply as of May 29 coming in at 378.90 million tons compared to 408.74 million tons last year – a decline of 29.84 million tons or 7.5%. Production for the previous 52 weeks also trended lower – finishing at 966.60 million tons compared to 987.33 million tons for the same period ending in 2014 (-2.1%).
The number of rail car loadings was also down sharply, finishing the week down 21.8% from the same period last year. Rail car loadings are also down sharply year-to-date – off 7.4% from the same period in 2014.

Electric output data was not updated again this week.

Domestic steel output finished up for the week. According to numbers from the American Iron and Steel Institute, domestic steel production was down 1.8% for the week, at 1.7 million tons, with a capacity utilization factor of 73.3%. However steel production continues its slide year-to-date — down 7.2% to 36.64 million tons produced compared to 39.50 million tons for the same period last year. As noted in previous reports, steel 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 decreases in production over the past week.
The Appalachian Basin finished at 4.13 million tons, down from 4.40 million tons last week. Interior Basin production also finished down slightly, 2.84 million tons compared to 3.03 million tons last week. Western production finished the week at 8.10 million tons from 8.68 million tons last week. All three basins also continue to report significant declines in production year-to-date, with Appalachia down 9.0%, the Interior Basin off 6.7% and the Western Basin down 6.9%.
Looking at the previous 52 weeks, all three basins are trending lower for the period ending May 29, with the Appalachian Basin down 4.1%, the Interior Basin down 0.2% and the Western Region down 1.7%. Production in the Interior Basin is off slightly — decreasing slightly to 183.14 million tons from 183.55 million tons for the same period in 2014. Appalachian production fell for the period to 257.18 million tons from 268.20 million tons. Meanwhile, Western production is down to 526.28 million tons from 535.58 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 28, 2015) stands at 36.23 million tons year-to-date, with 29.20 million tons produced underground and 7.03 million tons produced through surface operations. The number of mines reporting production ticked up by one to 127. 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 15,461 compared to 15,465 last week. Underground operations had 12,572 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 was off sharply from the previous week and from the same period in 2014. Kentucky production for the week was reported at 1.16 compared to 1.24 million tons last week and 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 10.4 percent.
Meanwhile, coal production in Kentucky is off by 6.2% for the previous 52 weeks, with western Kentucky reporting a 6.0% decline and eastern Kentucky operations reporting a decline of 6.5% year-over-year.
Wyoming coal production was down sharply for the week compared to 2014, coming in at 5.85 million tons, compared to 6.23 million tons the previous week, and that is off substantially from the 7.31 million tons produced for the same week in 2014 – a decline of 20%. For the previous 52 weeks, Wyoming production is down 2.3%. Illinois production also finished sharply lower for the week, coming in at 923,000 tons compared to 983 million tons for the same period in 2014. Indiana production is down as well, coming in at 580,000 tons compared to 746,000 tons for the week in 2014. Pennsylvania production for the week finished down slightly, to 1.02 million tons versus 1.21 million tons for the same week in 2014, but remains up 6.2% for the previous 52 weeks. Ohio production is off as well — dropping to 332,000 tons compared to 488,000 tons in 2014. Virginia production was also off this week – to 218,000 tons compared to 305,000 tons for the same week in 2014. Virginia production for the previous 52 weeks is off by 12.9 percent.
Coal prices on the spot market were fell slightly this week. Central Appalachian coal dipped 10 cents to $52.75 per ton or $2.11 per mmBtu. Northern Appalachian coal also dipped slightly to $58.75 per ton or $2.27 per mmBtu. Illinois Basin coal prices dipped to $40.45 per ton or $1.71 per mmBtu, while Powder River Basin coal remained steady at $11.55 per ton or $0.66 per mmBtu, and Uinta Basin coal prices dipped to $39.20 per ton or $1.68 per mmBtu.
Meanwhile, on the NYMEX Coal Futures board, Central Appalachian coal was trading at $44.53 per ton while Western Rail was selling at $9.83 per short ton and Eastern Rail was selling at $42.42 per short ton.
Natural gas prices on the Henry Hub finished the week up down 21 cents to $2.78 per million Btu. Natural gas producers again reported a significant increase in their stored reserves – up 132 billion cubic feet compared to the previous week, for a total of 2.23 trillion cubic feet in storage. This week’s working natural gas rotary rig count remained at 875, down 10 from last week and down from 1,866 a year ago – down 53.2%. This number includes rigs working in both oil and gas plays.

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