Term deals are hard to find in the Illinois Basin thermal coal market as producers struggle amid low prices below costs and weak domestic demand, sources said Tuesday.
One ILB producer reported "a lot of desperation from folks" in the market, including some selling coal $10-$15 below costs.
"We're out there looking for opportunities," he said. "We'd like to get a deal done with another utility that we're not currently working with."
The source reported hearing a deal at $28-$29/st for high chlorine coal from Foresight's Sugar Camp mine for delivery later this year.
The deal could not be confirmed.
While a hot summer would do much to help the industry, uncertainty remains with the outcome of the US presidential election and the Clean Power Plan still at stake, a Florida utility buyer said.
Uncertainty about the CPP has prevented some utilities from locking into long-term contracts, the buyer said.
"People don't know what to do," the buyer said. "If [the CPP] goes through, and we were out of compliance on our coal units, we would have to burn less. We would have to shut our coal unit down four months of the year."
The legality of the CPP is still under question since the Supreme Court stayed implementation of the plan, which seeks to cut carbon emissions from existing power plants by 32% from 2005 levels by 2030. The US Court of Appeals for the DC Circuit said last week it will review the case in September.
Buyers are also awaiting the outcome of the US presidential election, which could determine the future of coal, the buyer said.
"Anybody that supports the CPP will shut down coal," the buyer said.
