WEEKLY COAL PRODUCTION AND PRICE REPORT 6/19/15: U.S. Coal Production Up 1.5 Percent Over Last Week

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 $58.75  $2.26
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 $39.20  $1.66
Natural Gas (Henry Hub)             n/a 0.01   n/a  $2.78

By T.L. HEADLEY, MBA, MA
CHARLESTON — Coal production in the U.S. finished the week up again compared to theterry previous week. However production continues to be down from last year — off 17.3% from last year’s levels (18.57 million tons), according to the latest report from the Energy Information Agency (EIA) for the week ending June 13.

Production in the United States rose by 232 thousand tons (1.5%) to finish the week at 15.36 million tons compared to last week’s total of 15.10 million tons. Production for the week, however, is off by 3.31 million tons (17.3%) from the 18.57 million tons for the same week in 2014. Cumulative production for the year-to-date is also down sharply as of June 13, coming in at 409.38 million tons compared to 446.54 million tons last year – a decline of 37.16 million tons or 8.3%. Production for the previous 52 weeks also trended lower – finishing at 960.08 million tons compared to 985.94 million tons for the same period ending in 2014 (-2.6%).

The number of rail car loadings was remains down sharply, finishing the week down 18.4% from the same period last year. Rail car loadings also continued their decline year-to-date – off 8.3% from the same period in 2014.

Coal exports data was not updated this week.

Electric output was up 7.2 percent compared to the same week in 2014. With 83.87 MWH of electricity produced compared to 78.26 MWH produced for the same period last year.

Domestic steel output finished sharply down for the week, returning to its long-term downward trend.

According to numbers from the American Iron and Steel Institute, domestic steel production was down 8.8% for the week, at 1.75 million tons, with a capacity utilization factor of 73.9%, compared to the same week in 2014. And steel production continues its slide year-to-date – down 7.3% to 40.11 million tons produced compared to 43.28 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 slight increases in production over the past week compared to the previous week, however all remain down sharply compared to the same week in 2014.

The Appalachian Basin finished at 4.20 million tons, ticking up from 4.14 million tons last week. Interior Basin production also finished up slightly, at 2.90 million tons compared to 2.85 million tons last week. Western production finished the week at 8.25 million tons from 8.13 million tons last week. However, these numbers are sharply below the same week in 2014. The Appalachian Basin is off by 21% from the same week last year. The Interior Basin is off 15% from 2014. And Western production is off 17.5% from the same period in 2014.

All three basins also continue to report significant declines in production year-to-date, with Appalachia down 10%, the Interior Basin off 7.4% and the Western Basin down 7.8%.

Looking at the previous 52 weeks, all three basins are trending lower for the period ending June 13, with the Appalachian Basin down 4.6%, the Interior Basin down 0.6% and the Western Region down 2.3%. Production in the Interior Basin fell to 182.15million tons from 183.16 million tons for the same period in 2014. Appalachian production fell for the period to 255.05 million tons from 267.46 million tons. Meanwhile, Western production is down to 522.88 million tons from 535.32 million tons in 2014.

The West Virginia Office of Miners’ Health, Safety and Training did not update production number this week due to a state holiday, but EIA numbers for the state show coal production ticked up for the week ending June 13.

According to EIA, West Virginia coal production for the week totaled 1.76 million tons compared to 1.73 million tons for the previous week. However, this is off by 20.3% from the same week in 2014.
Production rose slightly in both the northern and southern coalfields of West Virginia compared to last week, by 1.5 percent in both areas, however year-to-date, production is off by 3% and 16% respectively.

Coal production in Kentucky for the week ending June 13 was also up slightly compared to the previous week but remains down sharply from the same period in 2014. Kentucky production for the week was reported at 1.18 compared to 1.17 million tons last week and 1.50 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 11.4%. Meanwhile production in the state is off by 6.7% for the previous 52 weeks, with western Kentucky reporting a 6.3% decline and eastern Kentucky operations reporting a decline of 7.2% year-over-year.

Wyoming coal production was up slightly for the week compared to 2014, coming in at 5.96 million tons, compared to 5.87 million tons the previous week, but was down from the 7.14 million tons produced for the same week in 2014 – a decline of 17.5%. For the previous 52 weeks, Wyoming production is down 2.9%. Illinois production also finished sharply lower for the week, coming in at 941,000 tons compared to 1.03 million tons for the same period in 2014. Indiana production is down as well, coming in at 591,000 tons compared to 729,000 tons for the week in 2014. Pennsylvania production for the week finished down slightly, to 1.04 million tons versus 1.18 million tons for the same week in 2014, but remains up 5.2% for the previous 52 weeks. Ohio production is off as well – dropping to 338,000 tons compared to 476,000 tons in 2014. Ohio coal production is off 12.7 percent for the previous 52 weeks, compared to the same period ending in 2014. Virginia production was also off this week – to 222,000 tons compared to 298,000 tons for the same week in 2014. Virginia production for the previous 52 weeks is off by 13.2 percent.

Coal prices on the spot market were unchanged this week. Central Appalachian coal held at $52.75 per ton or $2.11 per mmBtu. Northern Appalachian coal held at $58.75 per ton or $2.27 per mmBtu. Illinois Basin coal prices held at $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 held firm at $39.20 per ton or $1.68 per mmBtu.

Meanwhile, on the NYMEX Coal Futures board, Central Appalachian coal was trading at $41.92 per ton while Western Rail was selling at $9.97 per short ton and Eastern Rail was selling at $38.82 per short ton.

Natural gas prices on the Henry Hub finished the week up slightly at $2.78 per mmBtu. 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 2.33 trillion cubic feet in storage. This week’s working natural gas rotary rig count remained at 859, down by nine from last week and by 995 rigs from a year ago – down 54%. This number includes rigs working in both oil and gas plays.

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