US coal production drops in week to 2 May

T.L. Headley, West Virginia Coal Association.

According to the latest report from the US Energy Information Agency (EIA) and the National Mining Association, coal production in the US decreased by 1.63 million short t (7.6%) for the week ending 2 May compared to the same week in 2014. Production for the week was 17.36 million short t compared to 18.98 million short t for the same week in 2014.

Cumulative production for the year-to-date declined sharply as of 2 May, totaling at 315.27 million short t compared to 333.86 million short tons last year – a decline of 18.59 million short t or 5.4%. Production for the previous 52 weeks also trended lower – finishing at 979.05 million short t compared to 986.49 million short t for the same period ending in 2014.

The number of rail car loadings was also down sharply, finishing the week down 9.7% from the same period last year. Rail car loadings are also down year-to-date – off 5.3% from the same period in 2014.

Electric output saw a slight decrease of 1.9% for the week ending 2 May, but was also down (-0.4%) year-to-date. Steel output continued to decline, down 7% for the week and production finishing at 1.71 million short t, with a capacity utilisation factor of 76.6%. It continues its slide year-to-date — down 6.9% to 29.84 million short t produced compared to 32.06 million short t for the same period last year. A decline in steel production is considered a leading indicator of the broader economy and the continued declines seen in steel production usually translates into declines in durable goods orders and a softening of the national economy.

Looking at regional coal production, the results were positive, with all three major basins reporting increases in production.? The Appalachian Basin saw an rise from 4.60 million short t to 4.76 million short t for the week. Interior Basin production was also up for the week, finishing at 3.27 million short t from 3.17 million short t last week. Western production increased this week to 9.33 million short t from 9.04 million short t last week. All three basins continue to report significant declines in production year-to-date: Appalachia down 6.7%, the Interior Basin off 5.2% and the Western Basin down 4.9%.

Looking at the previous 52 weeks, Appalachian and Western Basin production results continue to decline for the period ending 2 May, declining 2.7% and 0.3% respectively. Meanwhile production in the Interior Basin increased 0.7% for the period — to 185.01 million short t from 183.68 million short t for the same period in 2014. Appalachian production fell for the period from 268.63 million short t to 261.30 million short t. Meanwhile, Western production declined to 532.73 million short t from 534.18 million short t in 2014.

According to the West Virginia Office of Miners’ Health, Safety and Training, coal production in the state for 2015 (reported through 7 May 2015) stands at 30.38 million short t year-to-date, with 24.23 million short t produced underground and 6.15 million short t produced through surface operations. The number of mines reporting production in March increased to125. The number of mines reporting production is subject to change as additional reports are submitted. The number of active miners working saw a decrease, coming in at 15 624 compared to 15 656 last week. Underground operations had 12 715 direct mining employees while surface operations finished up at 2 909 employees. These numbers are expected to change with additional reports.

Coal production in Kentucky for the week ending 2 May decreased to 1.34 million short t compared to 1.54 million short t for the same week in 2014, with the state seeing declines in both its eastern and western fields.

Meanwhile, coal production in Kentucky is off by 5% for the previous 52 weeks, with western Kentucky fields reporting production declines of 5.2% and eastern Kentucky operations reporting declines of 4.8%.

Wyoming coal production finished with a decrease for the week compared to 2014, coming in at 6.74 million short t, off from 7.30 million short t, a decline of 8%. For the previous 52 weeks, Wyoming production is down 0.9%. Illinois production saw a slight increase for the week, coming in at 1.06 million short t compared to 1.05 million short t for the same period in 2014. Indiana production is also down, coming in at 668 000 t compared to 745 000 million short t for the week in 2014. Pennsylvania production for the week is also down slightly, to 1.18 million short t versus 1.21 million short t for the same week in 2014; however it is up 8.6% for the previous 52 weeks. Ohio production is off as well — dropping to 382 000 million short t compared to 487 000 million short t in 2014. Virginia production was also off this week – to 251 000 million short t compared to 305 000 million short t for the same week in 2014. Virginia production for the previous 52 weeks is off by 11.8%.

Coal prices on the spot market saw little change this week. Central Appalachian coal held steady at US$52.85 million/short t, down 3 cents/short t, to US$2.12/million Btu. Northern Appalachian coal also declined slightly to US$60.90/short t, down 2 cents/short t, to US$2.34/mm Btu. Illinois Basin coal prices was firm at US$40.45/short t, down 32 cents/short t, to US$1.73/ million Btu, while Powder River Basin coal was unchanged at US$11.55/short t or US$0.66/million Btu, and Uinta Basin coal prices fell to US$39.30/short t, off 32 cents/short t, to US$1.70/million Btu.

Natural gas prices on the Henry Hub jumped 22 cents to US$2.72/million Btu. Natural gas producers reported an increase in their stored reserves – up 81 billion ft³ compared to the previous week. This week’s working natural gas rotary rig count dropped to 894, from 905 last week and 1855 a year ago. This number includes rigs working in both oil and gas plays.

Written by T.L. Headley. 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/mining/12052015/us-coal-production-drops-in-week-to-2-may-eia-nma-coal2259/