The price of Wyoming coal destined for 2006 delivery jumped 11% last week, driven by continued strong demand from utilities wanting to rebuild stockpiles. Next year's coal is now trading around $US15.45 a ton.
Power utilities trying to make up lost shipments bid aggressively last week to make up a week’s worth of deliveries, lost after torrential rains in Kansas washed away hundreds of feet of track on Union Pacific Corp's lines near Topeka.
Earlier in the year, heavy rain caused two derailments in Wyoming, disrupting supplies to plants across the Midwest, Great Plains, Southeast and Southwest. These utilities have been receiving on average about 85% of scheduled deliveries since May.
Dow Jones International News reported the coal price increases appeared to have bolstered the price of sulphur dioxide allowances, which traded at a new high this week of $US920 a ton. (Earlier in the year SO2 was trading at $US880 a ton, 26% higher than at the start of 2005).
Some utilities have been forced into buying higher-sulphur eastern coals to replace missed shipments from the West.
Pressure on coal supplies looks certain to continue for a while as temperatures drop and pipeline natural gas gets diverted away from utilities for home heating.