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the stage for production growth in IB to offset CAPP losses. PRB will gain on reverse switching, but at lower levels than anticipated in January. Production Outlook SNL Energy estimates 2013 PRB production (including northern and southern PRB) at 417 million tons, 1.7% lower than 2012 levels. With a significant amount of spare capacity and tighter inventories, pro- duction growth of 15% or more is possible, driven mainly by a rebound in domestic steam generation. It should be noted, howev- er, that early indications for 2014 production continue to show recovery of volumes rather than substantial growth. Over the next few years, erosion in the coal-fired generation base may limit growth still further. IB production grew an estimated 4.7% to 134 million tons in 2013, with prospects for both exports and switching from CAPP creating a relatively favorable demand picture. SNL Energy esti- mates 2014 production of 142 million tons, or 6% annual growth. New mines at relatively high volumes should enable this growth in capacity at competitive prices versus natural gas and CAPP coal. IB's production growth should continue over the next four to five years as it gains market share in domestic steam genera- tion, bucking the trend of flattening overall coal demand. With most Mine Safety and Health Administration (MSHA) quar- terly reports in for the fourth quarter of 2013, Appalachian tonnage is estimated at 272 million tons in 2013, which represents a nearly 8% decline from 2012. Steep declines in Central Appalachia were the main drivers, offset by relatively stable Northern and Southern Appalachian production. Eastern producers spent much of 2013 slashing produc- tion at marginal mines to achieve a lower cost profile and more sus- tainable production levels. Production and price results from the last two months suggest that these efforts are beginning to pay off, although the shutting in of mines will result in continued production declines. The looming erosion of core Appalachian markets in steam generation will push producers to focus on high-value export and met- allurgical markets, which will form an increasing part of baseline demand. SNL Energy estimates 2014 production at 263 million tons, 3.5% below estimated 2013 levels. Jesse Gilbert is a senior analyst and Steve Piper is the associate director of energy fundamentals for SNL Energy. www.snl.com m a r k e t w a t c h c o n t i n u e d March 2014 www.coalage.com 37 CA_pg38-41_V2_CA_pg46-47 3/11/14 2:45 PM Page 37