Coal Age

JUN 2019

Coal Age Magazine - For more than 100 years, Coal Age has been the magazine that readers can trust for guidance and insight on this important industry.

Issue link:

Contents of this Issue


Page 22 of 51

June 2019 21 illinois basin continued disadvantage with the spec coal. This forces consumers to blend ILB coal with low sulfur coal to meet the spec of <1% sulfur content. Reports are that when adjustments are made, ILB high sulfur coal must take a hit of 10% to 20% off of the API2 index (known as the sulfur discount). Recent statistics have shown that ILB coal exports are tied less to the API2 price than in previous years due to increased shipments to Indian and Middle Eastern markets. Now with Turkey possibly reducing its tariff to 5%, more opportunities might be pre- sented for ILB coal exporters. Future Developments Hanou Energy has surveyed all of the ILB coal producers, and has conducted independent research on the planned and potential mine expansions and mine openings. No attempt has been made at determining which mines will succeed in opening or expanding. Planned production is production that is likely to come on if markets develop. The effort identified numerous mine projects that are on the draw- ing board, but are considered to be long shots for development for a variety of reasons. Assuming natural gas prices of $3 per million Btu or higher, total ILB demand (domestic and exports) could increase to 125 million tons by 2020. An analysis of ILB planned production indicates there is enough production capacity to easily meet this demand. On the flip side, if nat- ural gas prices remain at low levels ($2.50 per million Btu or less), ILB domestic demand drops to 77 million tons in 2020. The export market could still represent an additional 10 mil- lion to 20 million tons. Since 2005, the weighted aver- age age of coal-fired power plant retirements is 50 years old. No new coal-fired power plants are planned for the U.S. Therefore, it's likely that more coal-fired power plants will be retired moving forward, so domestic demand for ILB coal will diminish. According to Hanou Energy, if gas remains at $3 per million Btu or high- er, domestic ILB demand could drop to 60 million tons by 2038 due to coal- fired power plant retirements. If gas prices remain at $2.50 per million Btu or lower, domestic demand for ILB coal could drop to 40 million tons by 2038. The export market represents the best opportunity for additional growth moving forward. John T. Hanou is principal with Hanou Energy. This article was adapt- ed from a report he recently published, Illinois Basin Coal Supply Study 2019- 2028. To obtain a copy, email jtha- Learn more at Moving heavy loads of rock, ore and dirt in terrain that is rocky, sandy or muddy requires tires that deliver superior traction, reliable long-term performance, retreadability, and a lower cost of ownership. We have intelligently designed tires proven to deliver optimum performance. Tires with a strong appetite for work We eat earth for breakfast, lunch and dinner ©2019 CMA, LLC.

Articles in this issue

Links on this page

Archives of this issue

view archives of Coal Age - JUN 2019