The spot market for Central Appalachian coal is still barren, and prices are feeling the effect. Sources told S&P Global Platts this week no utilities are buying and no coal is moving, even with lower and lower prices heard in the market.
Sources said pricing for CSX-quality coal (12,500 Btu/lb, 1.6 lbs SO2/MMBtu) has slipped into the low- to mid-$30s/st. Those more eager to sell are being pressured by the lack of demand and are dropping prices in hopes of making a deal.
Platts on Friday assessed CSX coal at $35/st FOB rail for Q3 delivery, down $1.25 from last week.
One producer said this week the spread between pricing in the spot market and the over-the-counter market is tightening. Traditional CSX spot deals have normally been made at a $3-$5/st premium to OTC pricing, he said, but in "desperate times" brokers or producers looking to generate some cash flow are willing to do so even at a "significant loss."
In the OTC market this week, physical deals for CSX coal included a $33.50/st trade for one train (11,000 st) for June delivery and a $36.50/st trade for three trains (99,000 st) a month for Q4 delivery.
A fuel buyer said Friday he knows of no CAPP-burning utilities looking for coal this year. Stockpiles are still elevated, the source said, with some overflow storage remaining off-site in extreme cases.
The fuel buyer added there have been fewer solicitations from brokers and producers recently because "the word is out" that nobody is buying.
"They've heard it all before for weeks," the source said, "and nothing has changed: I'm not buying and I don't know of anybody else who is."
Whether utilities get into the spot market this year depends largely on what happens this summer, the fuel buyer said. If a hot summer does deplete stockpiles, "there's a much better possibility" action in the spot market will heat up, he said.
