WEEKLY COAL PRODUCTION AND PRICE REPORT 7/10/15: U.S. Coal Production Falls Sharply 

Commodity Region/Fuel Avg. BTU SO2 Price  Price/mmBTU
Central Appalachia  2,500 1.2 $54.80  $2.19
Northern Appalachia 13,000 3 $58.05  $2.23
Illinois Basin 11,800 5 $40.55  $1.73
Powder River Basin   8,800 0.8 $12.10  $0.69
Uinta Basin  11,700 0.8 $39.35  $1.68
Natural Gas (Henry Hub)     n/a 0.01   n/a  $2.79

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

CHARLESTON — Coal production in the U.S. fell sharply for the week ending July 4. terryAnd the decline from last year steepened, with production off 16.6% from last year’s levels according to the latest report from the Energy Information Agency (EIA) for the week.

Production in the United States fell by 1.4 million tons (-9%) to finish the week at 14.15 million tons compared to last week’s total of 15.52 million tons. And production for the week is off by 2.8 million tons (16.6%) from the 16.96 million tons for the same week in 2014. Cumulative production for the year-to-date is also down sharply as of July 4, coming in at 459 million tons compared to 501.05 million tons last year – a decline of 42.05 million tons or 8.4%. Production for the previous 52 weeks also trended lower – finishing at 955.33 million tons compared to 985.78 million tons for the same period ending in 2014 (-3.1%).

The number of coal rail car loadings also fell sharply, finishing the week off 18.6% from the same period last year. Rail car loadings also continued their decline year-to-date – off 9.3% from the same period in 2014.

Coal export/import data was not updated again this week.

Electric output was down 4 percent compared to the same week in 2014. With 80.24 MWH of electricity produced compared to 83.61 MWH produced for the same period last year.

Domestic steel output, however, continued it’s near freefall this week.

According to numbers from the American Iron and Steel Institute, domestic raw steel production was down 11.4% for the week, at 1.68 million tons, with a capacity utilization factor of 71.2%, compared to the same week in 2014. And steel production continues its slide year-to-date – down 7.6% to 45.24 million tons produced compared to 48.96 million tons for the same period last year.

In terms of regional coal production, all three major basins reported sharply lower over the past week compared to the previous week, and all remain down sharply compared to the same week in 2014.

The Appalachian Basin finished at 3.76 million tons, sliding from 4.25 million tons last week (-11.6%). Interior Basin production also finished down, at 2.71 million tons compared to 2.93 million tons last week (-7.6%). Western production finished the week at 7.69 million tons from 8.34 million tons last week (-7.8%). And these numbers are sharply below the same week in 2014. The Appalachian Basin is off by 17.8% from the same week last year. The Interior Basin is off 16.2% from 2014. And Western production is off 16.1% from the same period in 2014.

All three basins also continue to report significant declines in production year-to-date, with Appalachia down 12.7%, the Interior Basin off 7% and the Western Basin down 6.7%.

Looking at the previous 52 weeks, all three basins are trending lower for the period ending June 20, with the Appalachian Basin down 6.5%, the Interior Basin down 0.7% and the Western Region down 2.2%. Production in the Interior Basin fell to 181.76 million tons from 183.05 million tons for the same period in 2014. Appalachian production fell for the period to 249.87 million tons from 267.18 million tons. Meanwhile, Western production is down to 523.69 million tons from 535.56 million tons in 2014.

According to the West Virginia Office of Miners’ Health Safety and Training, coal production in the state now stands at 44.05 million tons through July 2. Of that total, 35.27 million tons was by underground operations and 8.78 million tons was produced by surface mining. A total of 99 mines are now reporting production through May 2015.

According to WV OMHST, coal mining employment in West Virginia has now dropped to 15,296 total miners, with 12,459 working underground and 2,837 working on surface operations. The office does not report data for contract miners or preparation plant workers on a weekly basis.

According to EIA, West Virginia coal production for the week totaled 1.59 million tons compared to 1.78 million tons for the previous week (10.3%). And this is off by 16.7% from the same week in 2014.
Production declined in both the northern and southern coalfields of West Virginia compared to last week, by 9.6% in the northern field and 10.8% in the southern coalfields. Production is off in both areas year-to-date, by 1.1% and 17.7% respectively.

Coal production in Kentucky for the week ending July 4 was also down sharply compared to the previous week but remains down sharply from the same period in 2014. Kentucky production for the week was reported at 1.06 compared to 1.20 million tons last week and 1.34 million tons for the same week in 2014. Both the eastern and western regions of Kentucky reported significant declines in production from the previous week and the state continues to see significant declines in both fields year over year. Year to date, production in Kentucky is off by 16.3%. Meanwhile production in the state is off by 9.6% for the previous 52 weeks, with western Kentucky reporting an 8.1% decline and eastern Kentucky operations reporting a decline of 11.2% year-over-year.

Wyoming coal production was also down for the week compared to 2014, coming in at 5.58 million tons, compared to 6.02 million tons the previous week, and down from the 6.64 million tons produced for the same week in 2014 – a decline of 16%. For the previous 52 weeks, Wyoming production is down 1.8%.

Illinois production remains down, finishing the week at 921,000 tons compared to 973,000 tons last year. However, Illinois production is up by 13.8% for the previous 52 weeks. Indiana production is down as well, coming in at 539,000 tons compared to 655,000 tons for the week in 2014. Indiana production is also down by 6.1% over the previous 52 weeks. Pennsylvania production for the week finished down sharply, to just 889,000 million tons versus 1.04 million tons for the same week in 2014, and is now down slightly (0.1%) for the previous 52 weeks.

Ohio production is off as well – at 302,000 tons compared to 381,000 tons in 2014. Ohio coal production is off 13.3 percent for the previous 52 weeks, compared to the same period ending in 2014. Virginia production fell sharply this week – to just 199,000 tons compared to 254,000 tons for the same week in 2014 (-21.7%). Virginia production for the previous 52 weeks is off by 14.2%.

Coal prices on the spot market edged higher across the board this week. Central Appalachian coal rose slightly more than $1 to $54.80 per ton or $2.19 per mmBtu. Northern Appalachian coal jumped by $1.15 to come in at $58.75 per ton or $2.23 per mmBtu. Illinois Basin coal added 40 cents to close at $40.85 per ton or $1.73 per mmBtu, while Powder River Basin coal added 55 cents to close at $12.10 per ton or $0.69 per mmBtu, and Uinta Basin coal prices added 25 cents to finish at $39.35 per ton or $1.68 per mmBtu.

Meanwhile, on the NYMEX Coal Futures board, Central Appalachian coal was trading at $40.82 per ton while Western Rail was selling at $10.05 per short ton and Eastern Rail was selling at $41.33 per short ton.

Natural gas prices on the Henry Hub finished the week down $2.79 per mmBtu. Natural gas producers again reported a significant increase in their stored reserves – up 69 billion cubic feet compared to the previous week, for a total of 2.58 trillion cubic feet in storage. This week’s working natural gas rotary rig count remained at 863 up by one from last week and  down by 1,012 rigs from a year ago – down 54%. This number includes rigs working in both oil and gas plays.

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