US coal producer Peabody Energy still expects to produce and sell thermal coal at or slightly below 2023 levels this year despite missing its internal sales target last quarter.
The company today maintained its outlook of shipping 80mn-87mn short tons (72.6mn-78.9mn metric tonnes) of Powder River basin (PRB) coal this year and 14.5mn-15.5mn st of other US thermal coal. Peabody shipped 87.2mn st of PRB coal last year and 16.2mn st of other US thermal coal.
Peabody's first quarter 2024 PRB volumes dropped to 18.7mn st — the lowest in almost four years — from 22mn st in January-March 2023 because of a warmer-than-normal winter and low natural gas prices. But the company is expecting better market conditions over the coming months.
"We have already seen an uptick in some nominations for May," Peabody's chief executive officer Jim Grech said. "It looks like there is recovery starting to occur in the PRB."
Grech said that the recent nominations were a little stronger than what company executives had been expecting, and Peabody is getting some early indications that the trend may continue into June. He also said that over 20 power plants have announced delays and retirement dates, given projected load growth in the US thermal market, which could support medium- to longer-term coal demand.
The company has 85mn st of PRB coal under contract and priced to ship this year at an average $13.70/st. It has also 15.2mn st of other US thermal coal under contract at an average price of $54.20/st.
This quarter, PRB shipments should be around 15.5mn st and have an average price of $13.80/st and other US thermal coal sales should be 3.8mn st at an average price of $54.80/st, compared with 18.9mn st and 3.8mn st in the same period of last year.
The company shipped 3.2mn st of other thermal coal last quarter, down from 4.5mn st a year earlier. But it recently signed new contracts to ship 1.8mn st of this type of coal, which will support sales this quarter and in the back half of 2024.
Peabody also is working with the National Mining Association and America's Power to prepare lawsuits against the Environmental Protection Agency (EPA) over the agency's newly finalized suite of emissions, effluent and coal ash rules. The agency has "overstepped" its authority and threatens grid reliability at a time of increased energy demand, the producer said. But Grech said that the new rules finalized by EPA last week are not expected to have any near-term impact on US generation mix, and opposition to EPA's new rules "puts in doubt" the impact that these rules may have in the longer-term.
First quarter sales at the company's other coal business segments came in as expected. Peabody's metallurgical coal shipments inched up to 1.4mn st from 1.3mn st a year earlier, and its Australian thermal coal shipments increased to 4mn st in the first quarter of 2024 from 3.6mn st a year prior.
