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US weekly coal production slips again

27 Nov 2017 20:26 GMT
US weekly coal production slips again

Washington, 27 November (Argus) — US coal production fell for a seventh straight week, fresh evidence that the industry recovery that started last year has stalled.

Output fell to an estimated 14.9mn short tons (13.5mn metric tonnes) in the week ended 18 November from a revised 15.9mn st a year earlier, the latest data from the US Energy Information Administration shows. Production for the first half of the fourth quarter fell to 104.1mn st from about 110mn st in the same period of 2016.

If the recent pace of production is sustained, output this quarter will come in at around 193mn st, about 6mn st lower than a year earlier. That would be the first year-over-year decrease since the final three months of 2016.

Full-year production still is on track to beat 2016 levels as gains earlier this year helped bring total output up to 694mn st in the first 46 weeks of 2017 from 640mn st in the same period a year earlier. But output for the rest of 2017 likely will be at or below 2016 levels as producers in certain regions grapple with slower than expected improvements in domestic demand as well as some operational adjustments.

Earlier this month, Ramaco Resource Partners lowered its production outlook for 2017 because of delays in ramping up operations at some of its metallurgical coal mines. And Warrior Met Coal said its fourth quarter output would be the lowest this year because of the timing of three longwall moves.

Underscoring the softer production outlook, railroads have been shipping less coal in recent weeks than they had in 2016. Powder River basin (PRB) carriers have loaded an average 56 trains/week over the four weeks ended 11 November, down from 64 trains/week in the same period of 2016.

Central Appalachian railroad loadings remained higher than they had been a year earlier, at an average 6,219/week from 14 October-11 November compared with 6,136/week in the same period of 2016. Southern Appalachia shipments also were up on the year, at an average 850 trains/week compared with 580/week a year earlier. But Northern Appalachia loadings fell to an average 3,961 trains/week from 5,082.5/week in the same period of 2016.

EIA does not break out production by coal quality. Increased coking coal production likely has been the primary support for Appalachian basins this year as Ramaco and Warrior started new mines and expanded operations to take advantage of profitable seaborne markets. Production in Alabama, where Warrior's mines are, climbed to 10.7mn st year-to-date from 8.49mn st in the same period of 2016 and, in the week ended 18 November was still 10pc higher than it had been a year earlier, at 228,000.

But overall Appalachian coal production has fallen each of the last four weeks, and in the latest week covered by EIA was 2.6pc lower than it had been a year earlier, at 3.71mn st. On a year-to-date basis, it totaled 177.9mn st, which was 11.8pc more than in the same period of 2016.

Output from Montana and Wyoming, which is primarily PRB, has fallen each of the last nine weeks and totaled just over 7mn st from 12-18 November, compared with 7.53mn st a year earlier.

Illinois basin production slipped to 1.9mn st in the latest week from just over 2mn st a year earlier. EIA estimates that output in the region has been below 2016 levels for every week since the week ended 23 September.

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