Spot Coal Price Trends Vary Across Key Basins During 2013

Source: U.S. Energy Information Administration, Coal News and Markets, based on SNL Energy physical market survey

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Spot steam coal price trends varied across key basins in 2013. Compared with 2012, while total coal demand increased, total coal supply decreased, yet regional differences in market fundamentals resulted in different spot price trends. Central Appalachian (CAPP) coal prices trended downwards, Northern Appalachian (NAPP) and Powder River Basin (PRB) coal prices trended upwards, and Illinois Basin (ILB) and Rocky Mountain coal prices remained largely unchanged.

Coal demand increased in 2013. Higher natural gas prices in 2013 resulted in the greater use of coal for electricity generation and higher domestic consumption of coal. This resulted in total coal consumption in all sectors in the first 11 months of 2013 of 35 million tons, or 4%, more than the same period of 2012. Meanwhile, total coal exports in the first nine months declined by nearly 8 million tons compared to the same period in 2012, following a few years of growth. Continued weakening in the European economy, slower demand growth in Asia, increased output from other coal-exporting countries, and lower international coal prices all contributed to the decrease in U.S. coal exports.

Coal supply decreased in 2013. Total coal production in 2013 was 4 million tons, or 0.4%, lower than in 2012, according to Mine Safety and Health Administration (MSHA) data through the first half of 2013 coupled with EIA estimates for second-half 2013. Coal imports in the first nine months of 2013 were largely on par with the same period of 2012 and are likely to remain unchanged year on year. As a result, overall supply of coal was less than in 2012.

Source: U.S. Energy Information Administration, Weekly Coal Production, based on MSHA data. 

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Coal stockpiles fell in 2013. Coal inventories in the electric power sector dropped by 31 million tons from the end of 2012 to 154 million tons at the end of September 2013. The significant drawdown reduced the stockpile to below the monthly five-year average and met the increased demand for electricity generation. Subbituminous coal, mostly from the Powder River Basin, was burned from stockpiles at a greater rate than bituminous coal (18 million and 14 million tons, respectively).  (DOE-EIA)

Source: U.S. Energy Information Administration, Weekly Coal Production, based on MSHA data