The US government's Energy Information Administration (EIA) weekly Coal News and Markets analysis said other regions remained stable. In the Central Appalachian and Uinta Basins, the OTC spot coal prices tracked by EIA were unchanged. The Ilinois Basin average price declined by $0.25, to $23.75 per short ton.

EIA analysts Rich Bonskowski and Bill Watson said there was increasing interest among coal buyers in at least some replenishing of inventories.

“Buyers may not yet be ready to commit to term contracts at the prices being offered, but Coal Daily’s sources reported (August 18, p5) that Eastern coal prices, at least for spot purchases, continue to strengthen and that compliance coal supplies are tight,” EIA said.

“Those sources have seen a narrowing of the ‘backwardation’ of spot prices, which could quickly lead to increases in contract prices if spot prices go higher and supplies are perceived as becoming short.”

EIA analysts said their were several unresolved issues that continued to affect coal buyers who wished to secure longer-term, secure supplies of compliance coal.

Issues include five or six eastern coal producers are under bankruptcy protection and looking to sell less profitable mines and be relieved of unprofitable coal supply contracts. The US Army Corps of Engineers has been slow or unwilling to approve valley fill permits for new or expanded coal mines in West Virginia, Eastern Kentucky, and Ohio. The widespread power outages on August 14 disrupted OTC and NYMEX trading infrastructure. There is increased occurrences of hot weather in Midwestern and some Eastern population centres and the approach of the traditional time that power plants begin to contract for winter coal supplies.

“Reports of increased interest in contract coal are subject to interpretation. Offers of longer-term contract coal, if above current spot prices, are often not acted upon,” it said.

EIA analysts said railroads and some other market watchers believe that electric utilities began to replenish coal inventories during the second quarter of 2003 and in July. All four major railroad systems reported higher coal hauls and revenues in the second quarter.

Estimated coal production for the week ended August 9 was 20.7 million short tons (mmst). This was 0.2 mmst, or 0.9% lower than in the previous week and 2.6% above the comparable week in 2002.

Spot coal traders reported last month that interest was up among US coal buyers for imported coal because of a shortfall currently in CAP coal for short-term deliveries.