10/09/26
US coal production on track to decline in 3Q
Houston, 10 September (Argus) — Coal production is on track to fall from a year
earlier in most US basins this quarter because of muted domestic spot trading.
US mines produced an estimated 99.1mn short tons (st) (89.9mn metric tonnes) of
coal during the 10 weeks ended on 5 September, a 4.1pc drop from the 103.4mn st
mined in the comparable period in 2025, according to preliminary weekly
production data released by the US Energy Information Administration (EIA). The
agency, in its monthly Short-Term Energy Outlook, on Wednesday forecast US coal
production will fall to 130.9mn st for all of this quarter from 135.9mn st in
the third quarter of last year. EIA also expects domestic coal output to
continue to lag year-earlier levels each quarter at least through the end of
2027. Assuming there is no significant gain in the final weeks of the quarter,
US coal production will likely extend the downward trend established in the
first half of 2026, when output totaled 257.5mn st, down 1.1pc from the first
six months of 2025, EIA data show. The reduced US coal production for much of
this year has been primarily tied to growing power plant inventories. Despite
numerous heat waves across the US in recent months, natural gas prices remained
relatively low compared with recent years heading into and during the summer
cooling season, which helped to suppress plant coal burns under regular demand
conditions. As a result, many utilities have remained out of the spot market,
anticipating that their existing coal inventories and previously contracted
shipments will sufficiently hold them through the end of 2026. EIA's estimates
show that the Pittsburgh Seam was the only US basin to increase output.
Production from mines in Northern Appalachian coal-producing states – Maryland,
Ohio, Pennsylvania and northern West Virginia – inched up to 16.3mn st during
the 10 weeks ended on 5 September from 16.2mn st in the same period last year.
Part of this gain reflects increased output from some metallurgical coal mines
in the region that had been out of service for a large portion of 2025. Some
Pittsburgh Seam producers have also capitalized on more robust international
coal demand spurred by the ongoing war between the US and Iran that continue to
disrupt LNG trade flows through the strait of Hormuz. In addition, higher
petroleum coke prices in recent months have prompted some Indian cement buyers
to purchase more US high calorific-value coal from Northern Appalachia. Still,
elevated diesel fuel prices from the tensions in the Middle East have raised
mining costs for surface mine operations in Central Appalachia by several
dollars per short ton since the start of the war, and a number of producers in
the region have opted to further scale back output rather than contract
additional domestic or export business. For the third quarter through last week,
production from eastern Kentucky, Virginia and southern West Virginia — which
make up most of Central Appalachia — fell to around 9.6mn st, down 8.9pc from a
year earlier, EIA estimated. Over the same period, coal production in the
Illinois basin, which includes output from Illinois, Indiana and western
Kentucky, slid by 6.2pc to an estimated 11.6mn st. Western US bituminous coal
output is also on track to fall from a year earlier in the third quarter. EIA
estimates production in Utah dropped by nearly 24pc from the previous year to
around 1.4mn st in the first 10 weeks of the quarter, which at least partly
reflects some operational issues at a major underground mine in the state.
Wolverine Fuels' Skyline Mine No. 3 halted operations in January because of a
water-related issue, and as of mid-July, the company resumed production at part
of the mine as crews continued to complete maintenance work. Mines in Colorado
produced an estimated 1.97mn st so far this quarter, sliding by 7.4pc from a
year earlier. In addition, combined production in Montana and Wyoming, which
primarily yield Powder River basin coal, declined by 4.2pc to just under 46mn st
for the third quarter through last week from a year earlier. By Anna Harmon Send
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