Coal news and updates

US OTC coal market focuses on PRB activity, prompt prices close higher

Powder River Basin 8,800-Btu/lb thermal coal contracts accounted for most of the over-the-counter trading volume on Wednesday, with prompt month and quarter prices closing at or near their highest levels so far in 2014.

Physical May PRB 8,800 rose 15 cents/st to $12.60/st, the highest level for the front-month contract this year.

Prompt quarter Q3 2014 closed 5 cents/st higher at $12.90/st, just short of the year-to-date high of $12.95/st for the front quarter seen January 24.

Research firm PIRA Energy said that utility coal stocks are down by 30 days of inventory compared with a year ago. In its weekly coal market recap, released Wednesday, PIRA said inventories are particularly tight in the PRB market.

"With colder-than-normal weather continuing its draw of natural gas and coal stocks, days burn has fallen in most regions. PIRA estimates that total US electric power sector coal inventories will hit 115 [million st] at month end. This reflects 54 days of forward demand (versus 84 days one year ago)," it said.

"Inventories are tight in the Mid-Atlantic [for Northern Appalachian coal] and north-central Plains [for PRB coal] though the former region benefits from a high seasonal gas basis at present," PIRA Energy said.

In Wednesday's OTC session, PRB 8,800 physical May traded at $12.60/st for one train. The contract was last heard at $12.50-$12.75/st.

PRB 8,800 financial Q3 2014 over Q4 2014 traded at minus 40 cents/st for 10,000 st/month, minus 35 cents/st for 5,000 st/month, and at minus 45 cents/st for 20,000 st/month and 5,000 st/month.

ATLANTIC SPOT MARKET DROPS

European-delivered CIF ARA physical thermal coal spot prices dropped Wednesday due to lower bids and offers following the restart of loading at US miner Drummond's Colombian operations earlier in the week, which will increase the amount of supply available.

The CIF ARA-FOB CSX spread, or implied transportation spread, narrowed to $18.03/mt from $18.08/mt on Wednesday.

US East Coast thermal coal (6,500 kcal/kg NAR 1% sulfur) was assessed 25 cents/mt lower at $79/mt.

Source: Platts