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Coal Prices Remained Upbeat during the Week Ended January 26

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PRB spot coal prices

During the week ended January 26, 2017, PRB (Powder River Basin) spot coal prices closed at $12.45 per short ton, marginally above the previous week’s price of $12.40 per short 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. It also represents the lowest cost thermal coal-producing region in the world.

Peabody Energy (BTUUQ), Arch Coal (ARCH), and Cloud Peak Energy (CLD) are major coal producers (KOL) that operate in this region.

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Illinois Basin coal prices

ILB (Illinois Basin) coal prices remained unchanged at $34.17 per short ton on a week-over-week basis. This represents a multiyear low. 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 Resources Partners (NRP), and Alliance Resource Partners (ARLP) are major players that operate in the ILB. Utilities (XLU) such as Southern Company (SO) and Tennessee Valley Authority use ILB coal.

Coal prices in the Appalachian region

During the week ending January 26, 2017, Central Appalachian coal prices came in at $58.05 per short ton, which is about 3.6% higher than the $56.05 per short ton at the end of the previous week.

The Appalachian region, which is located in the Eastern United States, 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.

In the next part, we’ll discuss coal’s market share in electricity generation in the US.

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