Heartland chill could heat up market activity in the Ill. Basin

Washington (Platts)--5Dec2005

Nothing warms the cockles of coal sellers' hearts more than a stiff blast of
Arctic weather down through the heartland like what occurred last week. As
mild November temperatures slowly gave way to December's chill, the Illinois
coal market heated up even though not a lot of cash is changing hands there.

"Inventories are in real good shape, which is good for the utilities and bad
for the coal business, but we're just now getting cold weather," a salesman
told Platts Coal Trader last week. "It'll be picking up over the next 30-60
days. It's sleeting right now and threatening snow. Mining is going to become
increasingly difficult and coal burns are going to become increasingly higher.

"LG&E's got 50 days of coal inventory, TVA's been building inventory, Western
Kentucky Energy is a question mark, but I've got to believe they're OK --
that's the three majors for Illinois Basin coal, and Owensboro Municipal
Utilities has got its Peabody contract to depend on."

Warming up to the possibilities, he continued, "We need this cold weather to
linger. The jet streams are positioned such that we're getting huge amounts of
cold Arctic air coming straight down the gut of the United States, so we're
going to have a cold winter."

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