During the Obama Administration the PRB experienced a prolonged declining domestic market from 2008 to 2016 as coal production dropped by 176 million tons due to low gas prices, plant retirements and federally subsidized wind power. Record PRB production occurred in 2008 when 496 million tons were produced. Production in 2016 was only 314 million tons. While the damage done under Obama can’t be reversed, there is new optimism under the pro-energy Trump Administration. Now with the likely elimination of the Clean Power Plan, PRB demand is likely to increase and stabilize over the next few years. Over time, however, with the aging coal-plant fleet and no new plant builds, PRB demand is expected to drop.
Assuming natural gas prices are around $3/mmBtu, our Base Case demand forecast indicates PRB demand will likely increase to around 360 mmt in 2020 then drop to below 250 million tons by 2036 as aging coal-fired power plants retire. Our High Demand case suggests demand could be as high as 430 mmt by 2020 then dropping to 331 mmt by 2036.
In early 2016 we successfully predicted a tightening of the market and a strengthening in price to occur at the end of the year, and indeed this happened. Spot coal prices for 8,800 Btu coal increased by $3.55/ton from $9/ton in May 2016 to $12.55/ton in December. However, it appears the current spike has run its course, unless subbituminous stockpiles drop dramatically in the next year. So, what's it going to take for prices to spike again? When will it happen?
We don't have all of the answers, but we do have many observations and predictions to share with our readers. Prepared as a multi-client consulting study, this investigation is the most comprehensive review available on the PRB and Bull Mountain coalfield's coal geology, reserves, quality, historic, current and future coal production, coal control/ownership, transportation infrastructure, strip ratios, mine productivity and a 20-year forecast of production costs for all active and proposed mines. Also included in this study is a historical analysis of PRB price trends and our twenty year demand and price forecast for PRB coal.
With this report the reader can:
- Determine why and when coal price spikes occur.
- Discover how increasing strip ratios are affecting future mine costs and prices.
- Find out the factors affecting demand.
- What will be the impact of power plant retirements?
- How would have the PRB fared under the EPA's proposed "Clean Power Plan"?
- Understand the obstacles for success for each mining company and learn what the railroads have done to protect market share.
- Discover why Peabody, Arch and Cloud Peak are in the best position to be successful going forward.
- Contura has taken over Alpha. Why are they still in a precarious position?
- Can Kiewit and Westmoreland survive the long term?
- Understand the infrastructure and challenges facing PRB West Coast exports.
PRB Coal Supply, Demand and Price Trends 2017-2036
is priced at $10,000.
