Powder River Basin coal
For the week ended October 23, PRB (Powder River Basin) spot coal prices came in at $10.95 a ton. The Powder River Basin is located in Wyoming and Montana and is the largest coal-producing region in the US. The Powder River Basin accounts for almost half of the total US coal output. It is the lowest cost thermal coal-producing region in the world.
The ILB (Illinois Basin) remained at $32.75 per ton during the week ended October 23. The Illinois Basin is located in Illinois, Ohio, and Western Kentucky, and it produces high-sulfur coal. ILB coal became competitive with coal from the neighboring Appalachian region. Power plants installed scrubbers to soak up sulfur, which contributes to acid rain.
Peabody Energy, Natural Resources Partners (NRP), and Alliance Resource Partners (ARLP) are major players that operate in the region. Utilities (XLU) like Southern Company (SO) and Tennessee Valley Authority use ILB coal.
The Appalachian region
Central Appalachian coal prices increased marginally to $42.10 a ton while North Appalachian coal prices increased to $52.00 during the week ended October 23.
The Appalachian region is located in the Eastern US and is the oldest coal-producing region in the country. Of all the coal-producing regions, the Appalachian region is affected most by natural gas price movements. However, because Appalachian coal prices are already down to marginal costs, they show a reduced correlation with natural gas prices.