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Central Appalachian coal spot deals pick up, prices steady: brokers

The number of Central Appalachian spot coal deals picked up over the past two weeks as utilities' generation output and needs rose, industry players say, but prices are unchanged.

"There's not a lot going on, but its more than there has been," a long-time broker said Monday.

Recent spot transactions have increased CAPP coal shipments by "a handful of trains a month," the broker said of his contracts, adding that there have been other deals in the region but it is "not a lot of tonnage" compared to years past.

Reports filed last week with the US Surface Transportation Board showed CAPP coal train loadings increased in mid-August to an average of 22.2 trains a day -- a volume not seen in three months.

"It's been a hot summer in the South and Southeast, so that's where you're seeing the coal go," the broker added.

"Things aren't the same in the East and Midwest, it's been a milder summer, so you're not seeing a big difference there, where a lot of CAPP coal is [normally] burned," he said.

The broker attributed the uptick in coal demand to utilities bringing peaking coal plants online to meet demand.

"Even though stockpiles are high, some plants still need the coal," he said. "They're running gas units flat out, and when they're maxed out, you get a call for coal to meet the additional burn."

INCREASE IN DEMAND NOT AFFECTING PRICES

The long-time broker said he was glad to hear the utilities call for coal, but the increase in deals "is not helping prices."

Spot deals for 12,500 Btu/lb, 1.2 SO2/lb CAPP coal have averaged around $50/st, the broker said, flat to recent deals. He added that there have been some "isolated" deals below $40/st from sellers "just because they have to" move the coal.

A West Virginia producer last week noted there were spot CAPP deals going through for limited volumes on a monthly basis that were in some cases "above posted numbers" for prompt-month contract assessments.

"You cannot mine CSX [12,500 Btu/lb] coal and sell it for $45/st. You can't," he said.

The producer added that the spot CAPP barge market is almost "nonexistent." He said utilities have made a few specialized spot deals for blending in the $50/st range with "very rigid" constraints that have included strict coal specifications and have limited the origin source.

source: http://www.platts.com