Thursday, October 1, 2015

Coal roundup

The other day I went out looking for boats, but I didn't see any. I figured they were all still waiting in line at Lock 52.

Traffic is down here because coal is down. Here are some coal-related stories that came up in my Twitter feed this morning that may help explain some of that.

The Wall Street Journal looks at the impact of an oversupply in international coal markets on one company in particular. Excerpt:

Like other commodities, the coal market is mired in a glut. In recent months, the oversupply in coal has been exacerbated by rising output from troubled mining companies, which have been able to slash costs. That has dashed hopes for a recovery in prices either this year or next, traders and analysts say, and has put pressure on miners that took on debt to snap up assets when prices were higher.

Then there are a couple of articles from SNL Financial. First up is a look at how the retirement of a number of coal-fired power plants is affecting specific mines.

In 2014, the coal sector sold 3.7 million tons of coal to power plants that are now slated for closure by the end of this year. In total, about 5% of 2014 coal deliveries went to plants that are now expected to shut down in 2015. More U.S. coal buyers are slated to come offline every year through 2020.

I did a much, much shorter analysis a week or so ago.

Increased use of low-cost natural gas, clean air regulations and other factors have led to a 25 percent decrease in the use of bituminous coal in U.S. power plants in the past five years.

This is more long-term, but the EPA has issued a new rule that eliminates the discharge of certain metals in wastewater from power plants. You can figure it will affect coal-burning plants a lot more than those that burn gas.

The final rule is the first nationally applicable limit on the amount of toxic metals and other harmful pollutants that steam power plants are allowed to discharge, and is the first update to the effluent guidelines in over 30 years. The rule targets coal- and natural gas-fired, nuclear and other power plants that use steam.
I'm guessing we'll hear more about the impact of this rule when utilities such as AEP, FirstEnergy and Duke release their third-quarter earnings reports over the next six weeks.

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