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Regulations and Natural Gas Prices Push Steam Coal Prices Down

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PRB coal

Powder River Basin (or PRB) coal spot prices have averaged $10.3 per ton in 2015 so far, down from an average of $12.1 a ton in 2014. Right in the face of winter, PRB coal is hovering around $10 a ton.

The Powder River Basin, which is located in Wyoming and Montana, is the largest coal-producing region in the United States. It accounts for almost half of the total coal output in the United States, and it represents 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.

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Illinois Basin

The Illinois Basin (or ILB) dropped to a multiyear low of $32.6 a ton in November 2015, down from $44.6 a ton in November 2014. The ILB, located in Illinois, Ohio, and Western Kentucky, produces high sulfur coal. Notably, 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 Resource Partners (NRP), and Alliance Resource Partners (ARLP) are major players that operate in the region. Utilities (XLU) such as Southern Company (SO) and Tennessee Valley Authority use ILB coal.

Appalachian coal

Weak natural gas prices hit Appalachian coal hard. Central Appalachian coal prices have averaged $45.0 a ton in 2015 so far, down from $57.4 in 2014. Northern Appalachian coal prices have averaged $56.3 a ton, down from $65.8 a ton.

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