Peabody Energy estimates that Southern Powder River Basin coal prices are up about 30% in the trailing six-month period ended April 30, with SPRB stockpiles dropping below "normal" levels to 48 days use.
Peabody's estimates, which were presented Wednesday to investors at the Brean Capital 2014 Global Resources and Infrastructure Conference in New York City, also put some customer inventories at less than 10 days use.
SPRB coal inventories, overall, are down about 50% from the peak levels in 2012, as competing natural gas futures prices have more than doubled from April 19, 2012, when the front-month natural gas futures contract closed at $1.907/MMBtu
On Wednesday, the front-month natural gas futures contract closed at $4.619/MMBtu.
According to Peabody's presentation, SPRB and Illinois Basin coal are very competitive with natural gas, with breakeven prices for SPRB coal at $2.50-$2.75/MMBtu and at $3.50-$3.75/MMBtu for IB coal.
Central Appalachian coal breakeven prices are estimated at more than $4.50/MMBtu.
With SPRB and IB coal in the money, and CAPP coal regaining some price competitiveness, Peabody estimates that coal use is up 7% year to date through April and natural gas generation down 4%.
According to Platts data, the physical price for PRB 8,800-Btu/lb spot thermal coal is up 28.7% to $13.45/st from $10.45/st over the trailing six-month period ended April 30.
