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Atlantic met coal: High-vols drop as US suppliers chase business

Atlantic met coal markets Wednesday heard more reports of high-vol pricing coming under pressure as US suppliers chased any remaining export business as overall US coal demand was hit.

Gaps in pricing were seen as miners and traders follow requests from steelmakers able to move blends toward other origins and suppliers. Supply response in US high-vols continues, albeit at a pace yet to bring about much support to pricing. Demand for export low-vol remains limited, with preference in domestic sales limiting material for export in some cases. The Platts US low-vol hard coking coal assessment, based on good quality CAPP low-vol with 58% CSR and 1.5% MMR at 19% VM, fell $1.50 to $85/mt FOB US East Coast. The Platts US high-vol A assessment was marked $2 lower at $86/mt FOB USEC.

Platts assessed US high-vol B, based on 34% VM coal with 25,000 ddpm, down $3 to $81/mt FOB USEC.

A combination of weaker steel demand, idlings at blast furnaces and greater penetration of Australian coals into the region was heard reducing demand for US coals.

However, a contract-focused seller reported stable demand for a premium US coal and no significant replacement of the coal against Australian or other grades was seen.

"It's happening to some extent in the market but not affecting us," the miner said.

The US high-vol sector found the most price differences. A buyer suggested coal with greater than 25,000 ddpm fluidity, under 1% sulfur and 34-35% VM may now be offered in the low $80s/mt or slightly below. A US miner had little recent high-vol B business to report, but suggested prices were now found in the low $80s FOB US East Coast.

Another US miner said there was doubt for prices to fall into the $70s/mt FOB USEC unless the qualities and type of coal was markedly different to branded high-vol B.

A tradable range of the mid-$70s to the low $80s/mt FOB USEC was given for US high-vol B by a source not recently in the market, who expected prices may remain stable to end-September and early October cargoes. Another source earlier this week had price ideas around the $84/mt FOB level for a good high-vol B.

Availability for Australian high-vol is reducing on good contract demand and preparations to close mining operations at a major supplier. Prices were given indicative in the mid-$70s/mt FOB for one Australian high-vol brand.

With some interest around Q4 spot loadings of Australian premium coals and limited demand for US coals there was no let up in US price pressure, despite the higher mining and rail costs.

A source noted that US railroads are becoming more competitive amid lower coal prices.

source: http://www.platts.com