Powder River Basin 8,800-Btu/lb coal for Q1 2015 delivery was seen trading for the first time in the US over-the-counter market on Monday, and the contract price closed rose 25 cents/st higher to $12.10/st from Friday.
"Physical is stronger than financial in Q1 [2015]," a market source said, with the physically delivered PRB coal contract trading at a premium to the cash-settled financial contract. The swap contract was priced under $12/st, another market source said.
The first source said it is unclear as to why there was a premium on the physical contract, declining to speculate if the premium was related to potentially tighter market conditions in Q1 2015.
PRB coal producers are looking for improvements in rail service in Q1 2015, as the Western rail carriers add more power and crews to the network.
In Monday's OTC market, PRB 8,800 physical Q1 2015 traded at $12.10/st for one train/month.
PRB 8,800 physical Q1 2015 ex-Black Thunder traded at $12.30/st for one train/month.
Front-month prices remained at low levels, however, as rail bottlenecks and cooler-than-normal weather conditions have quelled demand in the spot market.
Bentek Energy, a unit of Platts, said US temperatures to are expected to gradually rise through the week, with an average weekly temperature of 77 degrees. Natural gas-fired power burn is modeled to average 29 Bcf/d.
In the OTC market, Platts assessed the PRB 8,800 September physical contract at $10.85/st, down 10 cents/st, as the contract was last heard with a bid of $10.80/st. The last time the front-month contract closed at $10.85/st was on December 20, 2013.
PRB 8,800 physical September traded at $10.85/st and $10.80/st, each for one train.
PRB 8,800 physical September ex-Black Thunder traded at $11.05/st for one train.
In the paper market, PRB 8,800 financial Q4 2014 traded at $11.25/st for 10,000 st, and at $11.20/st for 5,000 st/month.
In the Central Appalachian thermal coal market, the Q1 2015 CAPP rail (CSX) swap contract was seen trading as low as $57.50/st on Monday, down from the last seen trade of $58.20/st on August 12.
CSX financial Q1 2015 traded at $57.60/st for 5,000 st/month, and at $57.50/st for 5,000 st/month.
CSX financial September traded at $56.35/st for 25,000 st. The CSX physical contract was not seen trading in the session, and the price was assessed at $56.60/st, unchanged.
Separately, CAPP barge September traded at $59.90/st for 5,000 st. The price closed 20 cents/st lower to $59.90/st.
