Coal news and updates

CAPP rail contract declines across the strip in heavy trading

he Central Appalachia rail (CSX) futures contract traded heavily in Wednesday's US over-the-counter thermal coal market, but prices dropped substantially despite an uptick in both the Henry Hub futures prices and the CIF ARA financial Rotterdam contract.

"The market jumped around all day today," a market participant said. "It was kind of surprising how much we came off [in the CSX]."

There were no physical trades for the front-month July CSX contract heard Wednesday, though an offer was reported at $41.50/st, which was where the contract last traded on Tuesday.

In the futures market, the Cal 2017 CSX contract traded five times Wednesday, going first for $48.65/st then trading three times at $48.75/st before finally trading at $48.60/st.

Before Wednesday, the contract last traded May 22 for $49.85/st, down $1.25.

A spread trade for the front half of the 2016 strip over the back half of the same year went for minus $1.90 for 5,000 st/month, the first such trade cleared this year. The respective legs went at $44.75/st and $46.65/st.

The Q3 2015 CSX contract went for $41.25/st, down $1 from where it last traded June 5 at $42.25/st.

The Q4 2015 CSX contract traded three times, first at $43.25/st, then at $42.75/st and finally at $42.25/st. Prior to Wednesday, the contract last traded June 5 for $43.80/st, down $1.55.

The Q1 2016 contract went twice on Wednesday, first for $43.75/st then $43.50/st, while the Q2 2016 contract traded once at $45/st then again at $44.50/st.

The Q4 2016 contract also traded Wednesday for $46.50/st. It last traded June 3 for $47.55/st, down $1.05.

Based on the lower financial market, Platts assessed the front-month physical CSX contract at $40.50/st Wednesday, down $1 from Tuesday. It marks the lowest assessed price since May 11, 2009, when the contract was assessed at $40.35/st.

The move lower comes despite a 4-cent gain in the Henry Hub futures price Wednesday to $2.891/MMBtu, the third straight day of gains based on forecasts for warmer weather. In addition, the CIF ARA financial contract moved slightly higher in European trading on Wednesday, as the front-quarter contract moved up 5 cents to $57.15/st and the Cal 2016 contract moved up 15 cents to $57.55/st.

Also Wednesday, the CAPP barge contract was not seen to trade and no bids or offers were reported. The July contract was assessed at $44.25/st, unchanged from Tuesday, based on the lack of market activity. The contract has not traded since May 26.

Elsewhere in the market, a physical Powder River Basin 8,800 Btu/lb trade for the July contract was reported via broker to trade at $10.05/st for one train (15,000 st) shortly before Platts' 2:30 pm EDT (1830 GMT) assessment. The physical July contract was last heard to trade June 4 for $10/st.

Platts assessed the front-month July contract on Wednesday at $10.05/st, up 5 cents from Tuesday, based on the trade at that level.

source: http://www.platts.com