Coal news and updates

Drop in production keeps Utah, Colorado thermal coal pricing firm

A drop in Western bituminous thermal coal production out of Utah and Colorado has kept prices firm despite weak demand out of the East, a producer source said Friday.

The supply issues could affect pricing on term contracts for 2016, the source said.

"The bigger producers were all down in production last year," the source said. "The market has become tighter and flatter."

Utah production totaled 3.4 million st in the second quarter, down from 4.6 million st in the same quarter a year ago, while Colorado's production totaled 5.1 million st, down from 6.5 million st in 2014, according to data from the US Mine Safety and Health Administration.

Utah's largest producers -- Bowie Resource Partners, Murray Energy and Rhino Resources -- have either been flat or down in production at their largest mines.

Murray's West Ridge mine dropped production to 384,733 st from 630,732 st a year ago, according to MSHA. Rhino's Castle Valley mine, meanwhile, produced only 109,476 st in the second quarter, down from 255,829 st a year ago.

Murray has lowered production levels, while Rhino has experienced geological issues that have dropped production at the Castle Valley mine, the source said.

Bowie's Skyline No. 3 mine dropped in production to 820,745 st in Q2 from 1.1 million st in Q2 2014, while its Sufco mine was roughly flat at 1.7 million st.

In Colorado, demand has been "tepid" from the East, where Arch Coal reportedly signed a supply contract with an Eastern utility for roughly 800,000 st of coal, the source said.

The deal, which Platts could not confirm, would ship coal from Arch's Colorado mines by rail to Texas, then transport the coal by boat to Florida, the source said.

"I don't think the prices were very good, but it's a large chunk of tonnage," he said.

Arch Coal's West Elk mine stayed roughly even at 1.4 million st in the quarter, according to MSHA.

Colorado's other largest mine, Peabody Energy's Foidel Creek, produced 895,414 st in the second quarter, down from 2.1 million st in the same quarter in 2014.

Platts on Friday assessed Colorado's prompt quarter (Q4) 11,700 Btu/lb and 11,000 Btu/lb thermal coal at $31.50/st and $28/st, respectively, unchanged week on week, and assessed Utah's 11,500 Btu/lb thermal coal at $40.25/st, also unchanged.

source: http://www.platts.com