Coal news and updates

CAPP coal burn falling further than expected: sources

New US emissions rules, coal plant retirements and the continued low price of natural gas is hitting the Central Appalachian coal industry harder this year than at first predicted, according to brokers and fuel buyers positioned in the area.

"Obviously, both international and domestic markets are both real awful," said one CAPP coal broker. "There's just no activity. Low natural gas prices are eating into the coal burn, more than some folks were talking about last year."

The broker noted a utility with power plants across the region has reduced its 2015 coal-burn outlook by as much as 30% because it's burning more gas than originally anticipated at the start of the year.

According to Bentek, a division of Platts, coal generation for is down 9% year to date for PJM and down 16% year to date for MISO, while CAPP coal productions is down 16% year to date, the most of the US basins, and has fallen 29%, or 3.2 million st, in June compared to the year-ago month.

I think coal burn is way down," one fuel buyer said Friday. "Natural gas prices are still low and its use has been elevated, and the summer hasn't has been as hot as it could have been. You see the results in the price of coal -- it's way off."

The same buyer said CAPP thermal coals that were selling for about an average of $63/st last year has fallen into the low- and mid-$50/st range in 2015, which has made a big difference to the bottom line for many of the larger, investor-owned producers.

The coal companies that will prosper in the region will be the ones with the lowest costs of production, the buyer added. Many of the smaller "mom-and-pop" companies have been able to make consistent profits because of their location situated close to end users that help keep production and transportation costs low, he said.

"It's tough for everybody, even the big guys now," the broker said. "We all know that it's a really bad place in the market, and maybe some people are being more pessimistic than normal, but it's all a tough deal in here."

source: http://www.platts.com