Coal news and updates

CSX thermal coal contract flattens as bids outpace offers

The forward curve for the Central Appalachia rail (CSX) contract flattened Tuesday as buyers outnumbered sellers for a December train.

Three buyers vied for a single front-month (December) train (11,000 st), which sold at $41/st. It was the first physical deal for the CSX contract since November 3, when it traded for $37/st.

Platts assessed the contract price at $41/st, up $1.90 from Monday, based on this reported deal.

The trade was likely reflective of traders already selling out their December positions while producers are currently offering trains in the mid-to-upper $40s and lower $50s, a market source said.

"From an Eastern rail standpoint, producers have been very disciplined," he said. "I think we're in for a correction."

The correction could run anywhere from $2-$10, the source said.

"I couldn't get anyone to offer me a low $40s today," he said.

While incremental price increases could occur, a trader said it could take more time before markets experience anything more than a dead-cat bounce.

"I don't really see a correction afoot," he said. "We have a long way to go before that occurs."

The curve did flatten somewhat with several deals on the financial side keeping forward prices relatively in check.

The CSX contract had Q1 2016 trades at $40/st for five contracts/month (15,000 st) and later at $40.25/st, also for five contracts/month. The Q1 contract had traded Friday at $39.25/st and was up 90 cents on the day.

The CSX Q3 2016 financial contract also traded for five contracts at $42/st, up 10 cents on the day, while the Q4 2016 contract traded twice, first at $43.15/st and later at $42.75/st. The Q4 contract was down 40 cents on the day.

The Q3 2016 contract had last traded October 7 at $42.70/st while the Q4 contract had last traded October 22 at $44.35/st.

In the other Appalachian market, no bids or offers were heard for the CAPP barge contract. The first source said he had moved beyond the contract, which will be delisted by the CME Group at the end of 2016.

Platts assessed the contract price at $42.25/st, unchanged from Monday, based on a lack of market activity.

Out West, the Powder River Basin 8,800 Btu/lb contract was quiet Tuesday with only a reported front-month bid of $9.25/st. The contract had traded Monday for $9.95/st.

Platts assessed the contract price at $9.95/st, unchanged from Monday, based on broker marks.

source: http://www.platts.com