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Fed survey shows coal improvements

01 Jun 2017 16:56 (+01:00 GMT)
Fed survey shows coal improvements

Washington, 1 June (Argus) — US coal production continued to recover as power plants worked through inventories and extreme weather events constrained global supply, the Federal Reserve's latest business activity survey shows.

Producers in the eastern US reported higher output levels in recent weeks than they had a year earlier, according to the Fed's latest Beige Book survey, released yesterday. Companies in the Richmond district, which includes Virginia, Maryland, the Carolinas and most of West Virginia, said they expect to make capital investments "in the near future" if production and prices continue to be supportive.

Appalachian producers benefited from the aftereffects of Cyclone Debbie in Australia, which cut off metallurgical and steam coal supply from Australia and provoked an increase in seaborne demand for US coal. One rail operator reported increased traffic from mines to coal export facilities on the Atlantic coast.

Freight volumes in the Cleveland district also grew during the period of the Fed's latest survey, 11 April-22 May, largely due to increased demand from steel producers and the energy sector. Coal producers in the region, which includes western Pennsylvania, Ohio and eastern Kentucky, maintained "high levels" of production to meet improved demand.

This is a rosier picture for Appalachian producers than the one reported in the Fed's previous Beige Book, when companies reported prices and production as flat to lower. Illinois basin producers maintained the steady path reported in the previous survey.

The seasonally adjusted rate of the growth in production in the Fed's St. Louis district rose slightly from March to April. April output was up by 14pc, compared with a year earlier. Prices were unchanged from the last time the Fed had taken its survey.

Producers across the US are still facing competition from natural gas. In the Cleveland Fed region, natural gas production "remains at historic highs." Oil and gas drilling in the western US also increased, especially in Oklahoma, the Fed said.