Powder River Basin coal
For the week ended September 11, Powder River Basin spot coal prices averaged $10.97 per ton—$0.27 higher than the price for the week ending September 4. Located in Wyoming and Montana, the Powder River Basin, or PRB, is the largest coal-producing region in the United States. The PRB accounts for almost half of the total US coal output and is 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 remain relatively low. Weak prices for PRB coal don’t bode well for these producers.
The Illinois Basin, or ILB, is located in Illinois, Ohio, and Western Kentucky. The ILB produces high-sulfur coal. ILB coal recently became competitive with coal from the neighboring Appalachia region, as powerplants 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. For the eighth consecutive week, ILB coal prices remained at $34.35, a multiyear low.
The Appalachian region
The Appalachian region is located in the Eastern United States and is the oldest coal-producing region in the country. Of all the coal-producing regions, this region is affected the most by natural gas price movements. However, 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 $42.50 while North Appalachian coal prices remained at $51.90 during the week ended September 11.