Prompt demand is still lacking for Central Appalachian term coal, but utilities have made and are talking about securing deals for later this year and 2018.
AEP has already awarded its RFP issued early this month that included up to 500,000 st of CAPP barge coal for April through September delivery and up to 1.5 million st of barge coal for 2018 delivery. Sources told S&P Global Platts this week that the barge deals were made in the mid-$50/st range and the utility will likely take less than the maximum tonnage.
Otherwise, the spot market for CAPP barge coal remains weak. A trader on the Big Sandy River noted sellers would like to make deals at or above $60/st but pricing has slid from the start of the year in the smaller and more illiquid market.
Platts assessed NYMEX-quality (12,000 Btu/lb, 1.67 lb SO2/MMBtu) coal at $57/st FOB barge for Q2 2017 delivery, down $2 from last week.
Other CAPP-burning utilities have been corresponding more with producers for larger tonnages without issuing RFPs, though short supply continues to be a problem for buyers looking to make high-volume deals starting in the near term.
Utilities are making small spot CAPP rail deals of a train or two at a time, fuel buyers said.
A producer said the spot market has been "fairly quiet but fairly steady."
Pricing for front-month and front-quarter delivery is mirroring moves in the over-the-counter market, with Q2 deals this month ranging in the upper $50s/st to mid-$60/st.
Platts on Friday assessed CSX-quality (12,500 Btu/lb, 1.6 lbs SO2/MMBtu) coal at $58/st FOB rail for Q2 2017 delivery, unchanged from last week.
While prompt pricing is still being supported by coal availability, a slowing decline in the export market and new metallurgical output coming online could bring more thermal coal to the market and drive down prices, multiple sources said.
"When exports start to go down, that's going to affect everybody," one fuel buyer said. "Pretty much every producer or trader I talk to are sold out, but we're starting to see some of that lack of coal come back. That should help provide more attractive pricing."
