US coal production resumes gains in 2Q

Spanish Market: Coal, Coking coal
29/06/23

Coal production in the US has edged higher so far this quarter despite less-supportive market fundamentals and some lingering supply constraints in smaller basins.

Mines produced 135.9mn short tons (123.3mn metric tonnes) of coal in the 12 weeks ended on 24 June, according to preliminary estimates by the US Energy Information Administration (EIA). That is about 1.1pc more than in the same period of 2022.

The increase, if sustained, would follow a 0.2pc year-on-year decline in output in the first quarter. Last quarter's decrease was the first in two years.

Market conditions have deteriorated since last year's boost in buying activity and prices. For one, US thermal coal is in more ample supply following generally milder winter and spring weather and increased competition from natural gas and petroleum coke.

EIA uses weekly and monthly rail shipment data and historic seasonal patterns to make its estimates. The agency will revise figures for April-June 2023 after the US Mine Safety and Health Administration publishes mine-specific data later this year. On average, EIA estimates end up being greater than actual production figures.

Some coal producers are scaling back previously announced plans to expand thermal coal output. Those adjustments and any other reductions in production may be more evident later this year.

So far this quarter, EIA estimates output in most regions is slightly higher than it was in April-June 2022.

Production in Montana and Wyoming — which is predominantly Powder River basin coal — is 0.7pc higher than a year earlier, totaling an estimated 60.2mn st from 1 April-24 June. A slight increase in production in Wyoming, to 53.8mn st from 53mn st a year earlier, offset a drop in output from Montana mines.

Illinois basin and Central Appalachian production also is trending somewhat higher than in the same period of 2022, EIA estimates suggest.

The agency estimates Illinois basin output from 1 April-24 June increased by 2.4pc to 19.6mn st from a year earlier.

Central Appalachian coal production was estimated to have risen to 14.3mn st from just over 14mn st a year earlier. Most of that increase may be from producers ramping up new metallurgical coal operations. That also has been happening in Northern Appalachia.

Appalachian coal producers also are exporting both thermal and coking coal volumes that were put under contract either earlier this year or in 2022.

But EIA estimates that Northern Appalachian coal output for the quarter through 24 June dipped to 20.6mn st from 20.8mn st a year earlier as lower production in Ohio and Pennsylvania offset an increase from mines in northern West Virginia.

Bituminous coal production in Utah and Colorado also decreased, to a combined 5.19mn st from 5.49mn st, EIA estimates. That likely reflects continued constrains at American Consolidated Natural Resources' Lila Canyon mine in Utah as well as at Arch Resources' West Elk mine in Colorado.

By Courtney Schlisserman

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