uploads///Part  coal price

Indicators affect regional coal producers differently

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Nov. 20 2020, Updated 2:41 p.m. ET

Powder River Basin

The Powder River Basin, or PRB, is located in Wyoming and Montana. It’s the largest coal-producing region in the US. It produces almost half of the total US coal output. The PRB is also the lowest-cost thermal coal-producing region in the world.

Peabody Energy (BTU), Arch Coal (ACI), and Cloud Peak Energy (CLD) are major coal producers that operate in the region. All major coal companies are part of the iShares Russel 3000 ETF (IWV).

PRB coal spot prices averaged $10.30 per ton for the week ending February 20, up from $10.10 per ton the previous week. Rising natural gas prices took a bit of pressure off coal producers, including those with exposure to PRB coal. The marginal rise in natural gas prices lifted PRB coal prices.

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Illinois Basin

The Illinois Basin, or ILB, is located in Illinois, Ohio, and western Kentucky. The region produces high-sulfur coal. In recent years, ILB coal began to compete with coal from the neighboring Appalachian region. Most power plants installed scrubbers to soak up the sulfur, which causes acid rain. Peabody Energy and Alliance Resource Partners (ARLP) are major players that operate in the region.

ILB coal prices dropped to $42.3 per ton in the week ending February 20, down from $45.3 a ton the previous week.

Appalachian

The Appalachian region is located in the Eastern US. It’s the oldest coal-producing region in the US. The Appalachian region is most affected by natural gas price movements. Yet because production in the region has already been reduced, prices show less of a correlation with natural gas prices.

Central Appalachian thermal coal prices came in at $51.5 per ton for the week ending February 20. This was up marginally from $51.3 per ton the previous week.

For the latest updates, visit Market Realist’s Coal page.

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