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US thermal coal export interest picks up as ARA price increases

Houston (Platts)--18 May 2018 417 pm EDT/2017 GMT


Sentiment among US thermal coal producers on exports is bullish as overseas markets continue to show strength, particularly as demand in India, Europe and the Mediterranean remains strong, sources say.

The S&P Global Platts price for delivered thermal coal into Northern Europe peaked this week at $93/mt, the highest price seen for the prompt assessment since late January. On Friday, Platts assessed 15-60 day CIF ARA (basis 6,000 kcal/kg NAR) coal at $91.70/mt.

"At $90/mt, you will see all kinds of guys in the market," said one US Central Appalachia producer.

A significant amount of CAPP tons should be available for export as well, given the decline in domestic demand, said the producer. The trade is also being helped by declining heat quality in Colombian output, where producers are having a hard time delivering 6,000 kcal/kg, said the producer.

In the Illinois Basin, the export trade is also gaining steam, with more producers booking tons, driven by demand from Europe and the Mediterranean, said the producer.

"I'm running my tail off," said an Illinois Basin producer, when asked about export interest. The producer said demand is strong, but logistical issues, particularly with railroads, are stifling the speed of deals.

A European trader was offered 75,000 mt of June-loading Illinois Basin coal at $60/mt, basis 6,000 kcal/kg NAR.

The source said this was up from offers last week at $59-$59.50/mt, and the price rise was reflective of global coal prices surging as well as continued draft restrictions on the Mississippi River.

NAPP coal was offered at $80/mt for 75,000 mt of June-loading, basis 6,000 kcal/kg NAR product, unchanged from the offer level a week previous, according to a European broker.

"I would say nearly 100% of spot coal from the US is going to India currently," the source said.

The source added the European market was well supplied via term contracts agreed earlier in the year, although the high prices in Europe could create additional spot demand in the near term.

As well as this, strong pricing for South African coal created a favorable arbitrage for NAPP coal shipments to India.

Offers on a CFR India basis were heard between $103 and $110/mt, with sources saying the difference in price was down to certain producers having different positions on the dry bulk freight market.

--Andrew Moore, andrew.moore@spglobal.com

--Joseph Clarke, joseph.clarke@spglobal.com

--Piers De Wilde, piers.de.wilde@spglobal.com

--Edited by Keiron Greenhalgh, keiron.greenhalgh@spglobal.com




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