Eastern coal wards off inflation for now
By Purchasing Staff -- Purchasing, 10/17/2005 2:00:00 AM
Appalachian coal prices have risen slightly in recent days but actually are lower than this time last year. The real inflation is for lower-sulfur Powder River Basin coal, for which the spot market price is 125% higher than a year earlier.
The average Northern Appalachia spot price in October has risen to $54 per short ton for 13,000-Btu (British thermal unit) coal sold with less than 3% from the $53 average for July through September. The spot prices for coals from the other major supply regions did not change in either of the most recent weeks: Prompt quarter spot prices in Central Appalachia remained at $61/ton, Illinois Basin coal prices remained at $35/ton and Uinta Basin (11,700-Btu) coal remained at $37/ton. However, the Powder River Basin average spot price climbed by nearly 26% earlier this month to $13/ton from $10 for the 8,800-Btu coal tracked by the Energy Information Agency. Analyst Daniel A. Roling at Merrill Lynch in New York says this is demand-driven because power utility stockpiles continue to remain tight because rail maintenance—repairs to the roadbeds on the main line—has put a constraint on coal leaving the basin. EIA says "the continuing high prices for natural gas, with near-term New York Mercantile Exchange (Nymex) futures above $13.50 per million Btu, and for sulfur dioxide, above $900/ton, also tend to drive up low-sulfur, Powder River Basin coal values."
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