Coal Prices Remain Mostly Steady even as Natural Gas Prices Fall


Aug. 28 2015, Updated 7:07 p.m. ET

Powder River Basin coal

Powder River Basin spot coal prices averaged $10.20 per ton for the week ended August 21. That’s $0.50 lower than the price for the week ended August 14.

The Powder River Basin (or PRB) is the largest coal-producing region in the United States. It’s located in Wyoming and Montana. The PRB produces almost half of the total US coal output. It’s 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 (KOL) that operate in this region. Despite the increase, PRB coal prices still remain relatively low. Weak prices for PRB coal don’t bode well for these producers.

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Illinois Basin

The ILB (Illinois Basin) is located in Illinois, Ohio, and Western Kentucky. The basin produces high sulfur coal. In recent years, ILB coal became competitive with coal from the neighboring Appalachia region, as power plants installed scrubbers to soak up sulfur, which causes acid rain. Peabody Energy, Natural Resource Partners (NRP), and Alliance Resource Partners (ARLP) are major players that operate in the region. ILB coal prices remained at $34.35 for the sixth consecutive week, a multi-year low.


The Appalachian region is located in the Eastern United States and is the oldest coal-producing region in the country. This region is affected the most by natural gas price movements. But, because Appalachian coal prices are already down to marginal costs, they now show a reduced correlation with natural gas prices.

Central Appalachian coal prices dropped marginally to $42.77, while North Appalachian coal prices remained steady at $52.25.


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