PRB, Illinois basin coal prices reach record highs

Market: Coal
19/10/21

US thermal coal prices are at levels few would have expected just a year ago — at record levels or multi-year highs.

Prompt quarter Powder River basin 8,800 Btu/lb coal was assessed last week at a new record of $30.25/short ton (st). Illinois basin 11,500 Btu/lb coal also reached an all-time high of $86/st fob barge last week.

Appalachian, western bituminous and Uinta basin coal, meanwhile, have reached prices last seen in 2008 and 2009.

The current state of prices is markedly different than in the middle of last year, when near-historic low gas prices, high coal inventories at power plants and Covid-19 pandemic mitigation measures weighed on coal demand and brought coal prices to multi-year lows.

Market participants were expecting some recovery as economies emerged from the initial shocks of the pandemic. And most US coal prices rose steadily from July 2020-May 2021. Prompt quarter CSX 12,500 Btu/lb coal increased to $56.30/st from $34.60/st. Illinois basin 11,500 Btu/lb coal climbed by $6/st to $37.50/st, and Pittsburgh Seam 13,000 Btu/lb 4.5lb SO2/mmBtu coal rose to $40.10/st from $34.30/st.

But price gains started to accelerate in June as a rebound in electricity generation, rising natural gas prices and declining coal stocks pushed demand higher. Lucrative export markets has put upward pressure on US coal prices as well.

US coal supply has not kept pace with demand for various reasons. In addition to increased export demand, some coal sellers say a lack of capital and investment has prevented them from significantly scaling up production. Others point toward difficulty finding workers.

The price of prompt quarter Pittsburgh Seam 13,000 Btu/lb 4.5lb SO2/mmBtu coal more than doubled since the end of May, to $105/st last week. Some Illinois basin and Powder River basin coal prices also have more than doubled.

Supportive coal margins

Market conditions suggest coal consumption could remain elevated this winter. The spark spread for winter generation dispatch of 10,000 Btu/kWh coal units at the western hub of the PJM Interconnection reached a record $78.26/MWh on 8 October and has averaged $61.18/MWh since late September. Natural gas margins at the hub have averaged $26.56/MWh.

Coal spark spreads for winter power generation at some Midcontinent Independent System Operator and the Electric Reliability Council of Texas (ERCOT) hubs are also higher than gas margins. The season one coal spark spread at ERCOT North averaged $59.81/MWh from 29 September-18 October, which was $12.41/MWh higher than gas. At the Northern Illinois hub, the coal and gas spark spreads averaged $46.60/MWh and $28.12/MWh, respectively.

Recent forecasts from the US Energy Information Administration (EIA) and the Natural Gas Supply Association suggest lower-than-average gas inventories and that the US economic boom will put upward pressure on US gas prices this winter. Absent market changes, the US could have its highest gas prices since the 2007-08 winter, when prices averaged $8.05/mmBtu and the shale drilling boom had yet to take off.

But recent sharp gains in US coal prices are putting pressure on generation profitability. The season one coal spark spread at PJM West fell by 17pc last week compared with a week earlier, to an average of $56.69/MWh. That was more than four times the 3.9pc decrease in power prices. Gas margins dropped by 10pc to $25.99/MWh.

Average coal winter season spark spreads at the Northern Illinois hub and ERCOT North fell by 12pc and 3pc, respectively, last week from a week earlier. Over the same time frame, natural gas margins fell by 4pc at the Northern Illinois hub and rose by 4pc in ERCOT North.

The difference between season one coal and gas margins continued to shrink on 18 October. Coal margins at ERCOT North fell by nearly $9/MWh from the previous trading day, to $51.31/MWh. The gas spark spread dropped by less than $1/MWh to $48.86/MWh.

After consuming more coal than they have received, US coal buyers have said in recent weeks that they plan on conserving coal stocks and managing coal burn levels ahead of this winter because of limited supply. And if inventories run too low, they say they may burn more gas instead despite higher prices for the fuel.

Uncertainty also looms over the medium-term outlook for US coal. Last week, EIA lowered its 2022 coal consumption forecast for the US by 4.6pc to 540mn st (490 metric tonnes), saying that tight coal supply and low coal stocks could limit coal-fired generation.

By Nick Georgiou

Prompt quarter US coal prices $/st

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News

06/05/25

US EIA will not release international outlook in 2025

Washington, 6 May (Argus) — The US Energy Information Administration (EIA) no longer expects to publish one of its major energy reports this year after losing some of its staff through President Donald Trump's efforts to downsize the federal workforce. The EIA does not plan to publish its International Energy Outlook (IEA) — which models long-term global trends in energy supply and demand — this year because of a loss of staff responsible for producing the report, according to an internal email initially reported by the news outlet ProPublica . The EIA confirmed the authenticity of the email. "At this point, you can assume that we will not be releasing the IEO this year," the EIA's Office of Energy Analysis assistant administrator Angelina LaRose wrote in the 16 April email. "This was a difficult decision based on the loss of key resources." Oil and gas producers, traders, utility companies, federal regulators and foreign governments have come to rely on the data and models from the EIA, an independent agency within the US Department of Energy. The 2025 version of the IEO might still be published early next year, the EIA said. The agency for now is focusing on trying to "preserve as much institutional knowledge as possible" with an "all hands-on deck" effort under which remaining staff will document models and procedures on long-term modeling, LaRose wrote in the email. Trump and his administration have worked to cut the size of the government's workforce through voluntary buyouts and a process known as a reduction in force. The EIA has yet to say how many personnel it has lost, but about a third of the agency's 350 staffers have accepted voluntary buyouts, according to a person familiar with the situation. The White House last week proposed an 18pc budget cut for the non-nuclear portions of the Department of Energy, but has yet to say if it is seeking to cut spending at the EIA. Last month, the EIA released its premier report, the Annual Energy Outlook , but omitted its traditional in-depth analysis. A technical issue on 1 May delayed the release of a key natural gas storage report by more than three hours, the EIA said. By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Find out more

News

Australia's Labor win may aid low-carbon Fe, Al sectors

05/05/25

News

05/05/25

Australia's Labor win may aid low-carbon Fe, Al sectors

Sydney, 5 May (Argus) — The Australian Labor party's victory in the country's 3 May parliamentary election could support low-carbon iron and aluminium developers, providing policy clarity and public capital to the sectors. Labor's victory provides more certainty around Australia's A$14bn ($9.06bn) green hydrogen subsidy scheme, which will help steel producers transition towards hydrogen-powered steel furnaces. The opposition Coalition during the election pledged to scrap the programme, which will allow producers to claim A$2/t of green hydrogen produced from 2027. Australian steelmaker NeoSmelt and South Korean steelmaker Posco are developing electric iron smelters in Western Australia (WA) that produce hot-briquetted iron, which is used in the green steel process. Both projects will initially rely on natural gas but may transition to hydrogen-based processing as hydrogen production rises. Australia's hydrogen tax credits may prove crucial given ongoing hydrogen production challenges. South Australia's state government closed its Office of Hydrogen Power SA on 2 May, following a funding cut earlier this year. Labor can now also move forward with plans for A$2bn in low-emissions aluminium production credits, beginning in 2028-29. Smelters will be able to claim credits per tonne of low-carbon aluminium produced, based on their Scope 2 emission reductions. The party's proposal does not include any blanket credit for producers. Labor's aluminium production credits are aimed at supporting the Australian government's goal of doubling the country's share of renewable power from about 40pc to 82pc by 2030. Australian producers export about 1.5mn t/yr of aluminium, according to industry body Australian Aluminium Council, from four smelters located around the country. Green iron funding Labor's election win also secures its A$1bn lower-emission iron support pledge , first announced in late February. Half of the fund will go towards restarting and transitioning the 1.2mn t/yr Whyalla steelworks in South Australia into a green steel plant. The other half will support new and existing green iron and steel projects to overcome initial funding barriers. Labor has not allocated any funding through the programme yet. By Avinash Govind Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

Australia's Coalition eyes power, resource funding cuts

02/05/25

News

02/05/25

Australia's Coalition eyes power, resource funding cuts

Sydney, 2 May (Argus) — Australia's federal Coalition opposition has announced it will cut key energy rebates and resource sector subsidies, if elected on 3 May, to reduce forecast future budget deficits. The Peter Dutton-led opposition will cut programs, including the Labor government's A$20bn ($12.8bn) Rewiring the Nation transmission plan, and the A$15bn National Reconstruction Fund aimed at underwriting green manufacturing using domestic minerals. It will also unwind electric vehicle tax concessions to save A$3.2bn, and cancel planned production tax credits for critical minerals processing and green hydrogen estimated to cost A$14.7bn. Combined savings measures will improve the budget's position by A$13.9bn over the four years to 2028-29, the Coalition said on 1 May, cutting debt by A$40bn during the same timeframe. The announcement comes as opinion polls show Australia's next federal government is likely to force one of the two major parties into minority, after a campaign where cost-of-living relief promises have trumped economic reform policy. The centre-left Labor party is more likely than the conservative Coalition to form government at the 3 May poll. It holds a thin majority of just three seats in parliament's main chamber, the House of Representatives, meaning a swing against it would force it to deal with minor parties such as the Greens and independent groupings. Promising a stable government, as Australia emerged from Covid-19, Labor had benefited from a resources boom as Russia's invasion of Ukraine led LNG and coal receipts to skyrocket and China's emergence from lockdowns revitalised its demand for iron ore, which jointly form the nation's main commodity exports. But as markets adjust to a period of protectionist trade policy and predictions of a slowdown in global growth abound, economists have criticised the major parties' reluctance to embrace major reform on areas such as taxation, while continuing to spend at elevated levels post-pandemic. Australia's resource and energy commodity exports are forecast to fall to A$387bn in the fiscal year to 30 June 2025 from A$415bn in 2023–24. The Office of the Chief Economist is predicting further falls over the next five years, reaching A$343bn in 2029-30, lowering expected government revenue from company tax and royalties. Gas The Coalition has pledged a domestic reservation scheme for the east coast, forcing 50-100PJ (1.34bn-2.68bn m³/yr) into the grid by penalising spot LNG cargoes. Australia's upstream lobby has opposed this, but rapidly declining reserves offshore Victoria state mean gas may need to be imported to the nation's south, depending on the success of electrification efforts and an uncertain timeline for coal-fired power retirements. Labor has resisted such further gas interventions , but it is unclear how it will reverse a trend of rising gas prices and diminishing domestic supply, despite releasing a future gas plan last year. The party is promising 82pc renewables nationally by 2030, meaning it will have to nearly double the 2025 year-to-date figure of 42pc. This could require 15GW of gas-fired capacity by 2050 to firm the grid. On environmental policy, narrowing polls mean Labor's likely partners in government could be the anti-fossil fuel Greens and climate-focused independents — just some of the present crossbench of 16 out of a parliament of 151. The crossbench may drive a climate trigger requirement in any changes to environmental assessments, which could rule out new or brownfield coal and gas projects. Coal has been conspicuously absent from policy debates, but Labor has criticised the Coalition's nuclear energy policy as expensive and unproven, while the Coalition has said Labor's renewables-led grid would be unstable and costly because of new transmission requirements. The impact of the US tariff shock that dominated opening days of the month-long election campaign remains unclear. Unlike Canada, Australia is yet to be directly targeted by US president Trump's rhetoric on trade balances and barriers. But the global unease that has set in could assist Labor's prime minister Anthony Albanese, as he presents an image of continuity in an uncertain world economy. Australia's main exposure to Trump tariffs is via China, its largest trading partner and destination for about 35pc of exports, including metal concentrates, ores, coal and LNG. A downturn in the world's largest manufacturer would spell difficult times ahead for Australia, as it grapples with balancing its budget in a normalising commodity market. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

India extends directive to lift coal-fired generation

02/05/25

News

02/05/25

India extends directive to lift coal-fired generation

Singapore, 2 May (Argus) — India's power ministry has extended its directive requiring imported coal-fired utilities to boost generation by two months until 30 June, a move that could support demand for seaborne coal over the peak summer period. The directive covers imported coal-fired plants with a combined capacity of 17.5GW and was previously set to expire on 30 April. The decision could support India's coal imports, which have remained lacklustre so far in 2025. India imported 38.29mn t of thermal coal in January-March, down from 41.87mn t a year earlier, according to data from shipbroker Interocean. Imports may have remained under pressure in April, with India's seaborne thermal coal receipts estimated at 15.77mn t for the month, down from 15.84mn t a year earlier, according to trade analytics platform Kpler. India's coal-fired generation remained above the historical average in April in line with the uptick in power demand, although actual coal burn was down on the month and year. India's coal-fired generation — which meets most of its power requirements — stood at 113.48 TWh in April, down from 116.58 TWh a year earlier and 117.95 TWh a month earlier, according to data from the Central Electricity Authority (CEA). The extension of the order appears to be a pre-emptive measure by the authorities to ensure imported coal-fired utilities are well stocked to meet any uptick in power demand. The country is currently sitting on a surplus of domestic coal, with elevated inventory at its utilities. Delhi has been proactively directing utilities to boost output since mid-2022 to cater for seasonal surges in power demand. Combined coal inventories at Indian power plants stood at 56.69mn t as of 30 April, up from 47.92mn t a year earlier, but down from 58.11mn t as of 31 March, CEA data show. Inventories at state-controlled Coal India (CIL) also remained high, according to market participants. By Saurabh Chaturvedi Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

US factory activity contracts for 2nd month in April

01/05/25

News

01/05/25

US factory activity contracts for 2nd month in April

Houston, 1 May (Argus) — US manufacturing activity contracted in April for a second month, as output and new orders slowed on tariff policy uncertainty, while price gains accelerated. The Institute for Supply Management's manufacturing purchasing managers' index (PMI) fell to 48.7 in April, down from 49 in March and the lowest since last November. The threshold between contraction and expansion is 50. The two-month contraction in manufacturing activity follows a two-month expansion preceded by 26 consecutive months of contraction. ISM's services PMI, a separate report that tracks the biggest part of the economy, showed nine months of expansion through March. "Demand and production retreated and de-staffing continued, as panelists' companies responded to an unknown economic environment," ISM said Thursday. "Prices growth accelerated slightly due to tariffs, causing new-order placement backlogs, supplier delivery slowdowns and manufacturing inventory growth." The manufacturing data follows a report Wednesday that showed the US economy contracted at an annualized 0.3pc pace in the first quarter as businesses boosted imports and stocked up on goods ahead of US import tariffs. The ISM's new-orders index came in at 47.2, higher than 45.2 in March but showing contraction for a third month. The production index fell to 44, showing a deepening contraction from 48.3 in the prior month. Employment rose by 1.8 points to 46.5, showing a slowing contraction. New export orders contracted faster at 43.1 in April, while imports entered contraction at 47.1 after barely growing, at 50.1, the prior month. The prices index rose to 69.8, up from 69.4 the prior month and signaling quickening expansion. The inventories index fell by 2.6 points to 50.8, marking a second month of expansion after six months of contraction. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more