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US coal production continues to slide – off 38% from 2015

Published by , Editor
World Coal,


T.L. Headley

According to the latest reports from the US Energy Information Agency (EIA), coal production in the US continues to slide, finishing the week off by 38% from 2015 totals. Meanwhile spot prices for coal continue to hold steady as they have for the past month. Natural gas spot prices, however, continue to slide.

According to the EIA’s 1 April 2016 weekly report, US coal production for the week totalled just 11.60 million short t, down from 18.84 million short t for the same week in 2015. Year to date production totalled just 157.27 million short t, down from 227.45 million short t (down 30.9 %). And for the previous 52 weeks, production was off by 17.4%, down from 819.97 million short t from 992.90 million short t in 2015.

The decline in coal production was reflected in railcar loadings, which were off 37.8 % from for the week to just 66 281. This decline in rail traffic is almost entirely due to the decline in coal production and has resulted in both major eastern rail systems announcing major restructurings. CSX recently announced it is closing its regional headquarters in Huntington, West Virginia. Norfolk Southern likewise announced it is closing the Bluefield, West Virginia offices.Coal exports for the month of January (the most recent data available) were sharply below last year. Metallurgical coal exports are off by 38.5% from January 2015 and thermal coal exports are off by 54%. Imports of coal into the US were down for the month by 46.4%.

Electric output was down 4.6% compared to the same week last year, with 67 690 MWh of electricity produced compared to 70 933 MWh produced for the same period last year.

Domestic steel output was up was up from the previous week.

According to numbers from the American Iron and Steel Institute, in the week ending 26 March 2016, domestic raw steel production was 1.68 million net short t while the capability utilisation rate was 71.6%. Production was 1.60 million net short t in the week ending 26 March 2015 while the capability utilisation then was 67.7%. The current week production represents a 4.6% increase from the same period in the previous year. Production for the week ending 26 March 2016 is up 0.4% from the previous week ending 19 March 2016 when production was 1.69 million net short t and the rate of capability utilisation was 71.3%.

Adjusted year-to-date domestic raw steel production through 26 March 2016 was 21.5 million net short t, at a capability utilisation rate of 70.3%. That is down 3.4% from the 22.3 million net short t during the same period last year, when the capability utilisation rate was 72.1%.In terms of regional coal production, all three major basins report significant decreases from 2015.

The Appalachian Basin finished the week at 2.81 million short t, down from 4.83 million short t in 2014 (-42%). Interior Basin production also finished the week down, at 2.19 million short t compared to 3.51 million short t last year (-38%). Western production finished the week at 6.6 million short t from 10.30 million short t last week (-36%). All three basins remain down significantly for the previous 52 weeks, with the Appalachian Basin off 23.1%, the Interior Basin off 17.3% and the Western Basin off 14.7%.

According to the West Virginia Office of Miners’ Health Safety and Training (WVOMHST), coal production in the state stands at 11.66 million short t through 24 March. Of that total, 9.66 million short t was mined by underground operations and 2.01 million short t was produced by opencast mining. Only 62 mines have reported production in December 2015. Several large operations have idled production due to financial restructuring or in response to slack demand.

However, according to WVOMHST, coal mining employment in West Virginia has fallen sharply to just 11 907 total active miners, with 9782 working underground and 2125 working on opencast operations. The office does not report data for contract miners or preparation plant workers on a weekly basis.According to the EIA, West Virginia coal production for the week totalled 1.23 million short t, off from 2.11 million short t for the same week in 2015 – down 42%.

Production was down in both the northern and southern coalfields of West Virginia compared to the same week in 2015 by 39% and 45% respectively. For the week, northern West Virginia production finished up at 628 000 short t versus 617 000 short t last week and 1.03 million short t last year. Southern West Virginia, however, finished down at 601 000 short t versus 588 000 short t last week and 1.07 million short t a year ago.

Coal production in Kentucky ended the week at 774 000 short t produced, down from the 1.31 million short t from 2015. Eastern Kentucky coal operations finished the year at 344 000 short t, down from 596 000 short t. Meanwhile, western Kentucky coal operations finished at 431 000 short t versus 710 000 short t in 2015.

Wyoming coal production finished the week at 4.92 million short t versus 7.73 million short t in 2015 – off by 36%.

Illinois coal production finished the week at 839 000 short t versus 1.3 million short t for the same week in 2015. Indiana production, however, fell significantly, finishing at 461 000 short t versus 734 000 short t for the month a year ago. Ohio production finished the week at 205 000 short t versus 398 000 short t for the week in 2015. Pennsylvania production was down, finishing the week at 634 000 short t versus 1.1 million short t in 2014. Virginia coal production continues to tall, finishing the year down at 140 000 short t versus 286 000 short t for the year in 2015.

Coal prices on the spot market were unchanged this week. Central Appalachian coal finished the week at US$42.25/short t or US$1.69/million Btu. Northern Appalachian coal also finished unchanged, coming in at US$48.60/short t or US$1.87/million Btu. Illinois Basin coal held steady at US$32.20/short t or US$1.36/million Btu, while Powder River Basin coal remained at US$9.45/short t or US$0.55/million Btu. Uinta Basin coal prices finished unchanged at US$38.05/short t or US$1.63/million Btu.

Natural gas prices on the Henry Hub also held steady this week to finish at US$1.79.million Btu. Natural gas producers reported a significant decline in their stored reserves – at 2.47 trillion ft3, down by 25 billion ft3 compared to the previous week, for a total of 3.48 trillion ft3 in storage. This week’s working natural gas rotary rig count is down by 12 from last week to 464 working rigs. And the count remains down by 584 rigs from a year ago – a decline of 21%. This number includes rigs working in both oil and gas plays.

About the Author

T.L. Headley is a veteran public relations expert and former journalist with more than 20 years in mass communications with a focus on energy. Headley has an MBA in finance and management and an MA in journalism. He is the principal for Genesis Communications and is a public relations consultant for several major coal and energy organizations in West Virginia. Headley is also a 2001 graduate of the West Virginia Chamber of Commerce’s Leadership West Virginia program.

Edited by Harleigh Hobbs.This article first appeared in the WV Coal Seam blog of the West Virginia Coal Association.

Read the article online at: https://www.worldcoal.com/coal/04042016/us-coal-production-continues-to-slide-512/

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