Uncertainty remains the watchword for Illinois Basin coal buyers as they head into what traditionally is the fall buying season, sources said this week.
Mild weather, along with weak power pricing, has tempered coal demand among buyers who are considering their options for the balance of the year, they say.
Even natural gas pricing, while higher than a year ago, is "still beating coal when run through a combined-cycle" unit, a Midwest utility source said.
"Power pricing is not great and here in the greater Chicago area, summer is taking a break this week," the source said. "Renewables are still the story and are continuing to suppress power prices."
The source quoted Illinois Basin prices "in the high $30s/st," but said that the prices were more indicative and could fall into the mid-$30s/st. "These still seem high to me given the fundamentals," he said.
A Kentucky utility buyer said he did not expect an increase in demand in the fourth quarter of the year with shoulder-season weather and demand "looming."
"Too many large units are preparing to idle or go into shut down," he said. "Not only coal jobs are being lost, so are coal-fired utility jobs."
Both Atlanta-based Southern Company and Florida-based Lakeland Electric reported burn on level with projections. A Southern buyer said he expects to have a request for proposals out for bituminous coal "in the next few weeks."
Lakeland buyer Tory Bombard said the utility will probably issue a tender for low sulfur coal in Q4 for its 2018 needs.
With pockets of interest from utilities varying by geography, Illinois Basin producers are keeping an eye out for possible spot purchases.
'DOG DAYS OF SUMMER'
"It's the dog days of summer," a producer source said.
Duke Energy has been quiet, but the source said he expects Duke to "maybe" issue a spot solicitation for Q4 and into 2018, 2019 and possibly 2020 by early September. Duke was not available for comment Friday.
Another large southeastern utility is still evaluating responses to a request for proposals it sent out earlier this summer, the source said.
S&P Global Platts assessed Illinois Basin 11,500 Btu/lb low chlorine barge coal for prompt-quarter delivery at $36/st, up 50 cents from last week's assessment, based on a survey of market sources.
