Illinois Basin coal market sentiment has been positive, but few deals are getting done with buyers and sellers still far apart, sources said Friday.
Southeastern utility interest has been stronger with coal consumption increasing 41% through Thursday to 18.3 million st, according to data released Friday by S&P Global Platts Analytics' Bentek Energy.
At the same time, US coal stockpiles have dropped roughly 21% this year to an estimated 150 million st, data showed.
Most utilities still have plenty of coal on the ground, sources said.
"Nobody's hurting on inventories right now and producers aren't fat either," a shipping source said.
Utilities were looking for coal priced in the mid-$30/s while producers were still selling in the low $40s/st, the source said.
One Southeastern buyer said Q1 prices for 11,500 Btu/lb 5 lbs/SO2, low chlorine coal were in the $34-$35/st range, but said forward prices would be depend on regional demand, burn rates and export markets.
"A lot depends on what happens with the API2, he said.
"The market is tighter," the buyer said. "It will be interesting to see if those marks stay in that range for Q2 and Q3." Export business has declined precipitously as S&P Global Platts CIF ARA prices have declined $15, or 15.6% since hitting their 2016 high at $96/mt December 23.
UTILITIES 'TESTING THE MARKET'
Utilities including Duke Energy, East Kentucky Power Cooperative, Seminole Electric Cooperative and Lakeland Electric have expressed interest in spot or term coal.
Duke issued six-month spot solicitation via phone this week from March through August for an unspecified amount of coal across all of its service areas, sources said.
While the recent utility RFPs were overall positive, the shipping source said he doubted that they would amount to many deals. Rather, utilities were likely "testing the market" for the busier summer season ahead, the source said.
An ILB producer also reported a "positive buzz" at a major coal conference in Miami last week, but said sales have gotten off to a "sluggish start."
Inventories were not burning down as fast as had been expected entering winter, the source said.
"You can't run a business off wishful thinking," the producer said.
Utilities are still watching closely NYMEX March natural gas markets, which dropped 10 cents in early trading Friday to $3.041/MMBtu. Volatile gas prices had been as high as $3.93/MMBTu December 28.
Platts assessed Illinois Basin 11,500 Btu/lb, 5 lbs/SO2 low chlorine coal for Q2 at $35.10/st, unchanged from last week.
