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Illinois Basin coal prices dropped in November

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Illinois basin

The ILB (Illinois Basin) covers most of Illinois and parts of Ohio and western Kentucky. It runs parallel to the CAPP (Central Appalachian) coal region. The region produces bituminous coal with a heat value ranging from 10,000–12,500 British thermal units per pound—compared to 12,000–13,500 British thermal units per pound for Appalachian and ~8,500 British thermal units per pound for the PRB (Powder River Basin).

Major coal producers (KOL) in the ILB include Peabody Energy (BTU) and Alliance Resource Partners (ARLP). PPL Corp. (PPL) and AES Corp. (AES) are the major coal users from the ILB. For more details on the ILB coal, read Must-know: The EPA helped a coal producing region.

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Price trend

Like Appalachian coal, the ILB coal prices also dropped in November. The prices came in at $44.50 per ton—compared to October’s $44.70. It dropped by $0.20 per ton. Since the beginning of the year, the ILB coal prices decreased by over $1.70 per ton. The decrease was due to competition from natural gas and regulatory issues surrounding the industry.

What lies ahead?

We may see the ILB’s coal prices drop more if natural gas prices remain subdued during the winter. While the region has an advantage over the CAPP region in terms of heat value per dollar, it isn’t protected from competition from natural gas. As a result, natural gas prices are important to determine the short-term price trend for the ILB coal.

In the next part of this series, we’ll summarize the indicators that we’ve discussed so far.

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