Coal news and updates

PRB spot coal falls to lowest level of 2014; CAPP market shut out

Powder River Basin 8,800-Btu/lb for September delivery closed 20 cents/st lower to $11.10/st on Monday, the lowest price for the front-year contractsince December 23, 2013, when the price was assessed at the same price.

On Monday, the September spot contract traded at the bid price of$11.20/st for one train. At the 2:30 pm EDT (1830 GMT) Platts Market on Close,the contract was offered at $11.15/st, and there were no bids.

"No utilities buying in the spot, or they come in maybe twice a month," amarket source said, attributing the lack of buying interest to railconstraints and bearish weather conditions.

No other trades were seen in Monday's US coal over-the-counter session,with the Central Appalachian market shut out of both the swap and physicalmarkets. Prices have been relatively less volatile in CAPP, with spot priceshovering around $61/st since the end of March.

According to the latest electric power data from the US EnergyInformation Administration, electric power sector coal-fired generationtotaled 118.4 GWh in May, slightly down from the 118.7 GWh in May 2013. Incomparison, natural gas burn totaled 80.7 GWh in May, up from 75.5 GWh a yearago.

"Declining prices for [natural gas] across many areas of the US duringMay 2014, and a very moderate demand profile due to the climate shoulderseason of May, contributed to a very solid 6.96% yearly increase in MWhgenerated by [natural gas] during May 2014," Global Hunter Securities analystRichard Hastings said in a research note released Monday.

By region, Hastings said that the weakest showing for coal -- where coalhas any major presence -- was indicated in the Middle Atlantic, wherecoal-fueled power generation declined 19.3% on a year-on-year basis to 6.75GWh. New Jersey, New York and Pennsylvania comprise the Middle Atlanticdivision.

The best increase in the electric power sector output from coal came fromthe South Atlantic region, with 23 GWh, compared with 18.8 GWh a year ago,Hastings said.

"The cost of [natural gas], on a $/MMBtu basis, declined by 14.0% duringMay on a [year-on-year] basis, explaining a significant piece of the [naturalgas]/coal switching during the month," Hastings added.

Looking ahead, Hastings said the weather will likely continue to begenerally too moderate going into October to push enough electricity demand,contributing to natural gas surplus growth in the coming months.

On Monday, CAPP rail (CSX) physical September was last heard at$55.75-$56.75/st. Platts assessed the front-month price unchanged at $56/st.

Source: Platts