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US coal prices and production down in 2012

World Coal,

The US Energy Information Agency (EIA) has released a report on US coal production and prices for 2012 that shows both were down from 2011 figures.

Coal prices in the five major US production basins – northern and central Appalachia, and the Illinois, Rocky Mountain and Powder River Basins – fell during H1 2012 but stabilised during H2 2012.

Appalachian and Powder River Basin (PRB) thermal coal prices were driven down mostly by the demand for and availability of cheap natural gas for power generation. The low demand for coal and ensuing stockpiles meant that prices barely rose in the later months. Overall average Central and northern Appalachian coal prices for 2012 fell 18% and 14%, respectively, from 2011 levels, while PRB prices dropped almost 30% compared to the year before.

Production for the year declined by 7%, and fell in almost every region. The only exception was the Illinois Basin, which raised production by 9%, representing competition for the other areas. The increased demand for the Illinois Basin’s low-cost, high-sulfur coal can be attributed to the increased use of SO2 scrubbers at power plants. These enable the facilities to meet emissions regulations set by the Environmental Protection Agency (EPA) even with high-sulfur coal, as the scrubber remove around 90% of the SO2 from the plant’s emissions. This has made the Illinois Basin’s cheaper coal far more competitive.

In other positive news for the country, 2012 was a record year for exports of both thermal and metallurgical coal.

Adapted from press release by Lauren Bryant.

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