Coal news and updates

US met coal buyers talk up import possibilities in 2016

The US met coal market's beleaguered miners are battling for a share of a smaller domestic cokemaking pie, while some US buyers are talking about utilizing imports in 2016 as lower seaborne prices increase arbitrage trade.

US utilities have long imported Colombian and more recently Indonesian thermal coals, testing export-orientated East Coast port to handle inbound flows.

Talk of Australian coal imports has thrown up questions around what may be possible, as Canadian met coals have largely featured in import statistics to now. There may be quality considerations, should US mines shut and reduce supplies of certain grades to necessitate imports, a source said.

"Australian coals into North America would really solidify the idea of a global clearing price," a bank source involved in the market said.

Supply-side and shipping sources familiar with Australian tradeflow into the Atlantic have not confirmed taking enquiries for US-bound business, although market chatter on the idea was growing.

A source said freight from Queensland to New Orleans at a time of Capesizes pricing to Brazil in the $4/mt range, and onward up-river barging may have worked at the time. Freight rates have increased since then.

Since 2012, met coal imports from Canada into the US have been on a slight decline: down from 964,377 st in 2012, to 831,749 st in 2014. The US imported 369,844 st through January-May 2015, annualizing at 893,994 st.

Pembina, North Dakota, feeding train lines into the Great Lakes and Midwest steel region, has been the largest point of entry for Canadian coals, taking in 1.8 million st of the total 3.1 million st imported since 2012.

Canadian met coal imports into Detroit, Michigan, however, have been on the rise -- in 2012, imports into Detroit totaled 269,018 st, or 27.9% of the total Canadian imports. By 2014, imports into the city were up to 341,205, or 41% of total Canadian imports.

The increase of imports into Detroit has coincided with a drop in imports into Pembina. In 2012, imports into Pembina were 648,044 st, or 67.2% of total Canadian imports, but fell to 438,725 st, or 52.8% of total imports.

Canada's Teck is selling met coals export against the $93/mt FOB benchmark over Q3, and has agreed lower prices in spot trade.

Teck's average transportation costs for coal during Q2 2015 were $27.22/st basis.

In the $80-$90s/mt FOB range for Teck's seaborne prices, prices may convert to the low $50-$60s/st FOB Mine, which could be at a significant discount to US prices, even with longer rail transportation.

US pricing for 2016 is being discussed in the low $80s/st FOB Mine for the best coals.

The Platts Premium Low-vol swap contract for 2016 cleared on the CME was assessed at $82.25/mt FOB Queensland, which converts to around $74/st FOB Queensland.

Canadian Pacific Rail moves Canadian coal to steel manufacturers in the Great Lakes area as well as to West Coast ports for exports, it said on its website.

Colombian met coals are also in the US data into Southeastern ports, but the supplies are not necessarily going into coke plants but into thermal and industrial coal markets, according to market observers.

source: http://www.platts.com