Powder River Basin 8,800-Btu/lb coal spot prices in the over-the-counter market remained at bearish levels on Tuesday, with the November physical and December swap contracts trading at or near their lowest levels this year.
Peabody Energy CEO Greg Boyce said that OTC PRB prices were being impacted by "problematic" near-term rail deliveries during Monday's third-quarter earnings conference call.
"Everybody is focused on getting their contractual deliveries. And additional volume, as it becomes available on a railroad, is going towards trying to maintain and meet those contractual requirements," Boyce said.
Longer term, Boyce said that there is a significant amount of pent-up demand to rebuild inventories depending on the fluidity of the rail system.
With limited demand for spot coal in the OTC market, the front-month contract continues to trade at or near its lowest levels of the year.
On Tuesday, PRB 8,800 physical November traded at $10.80/st for one train twice. The price was assessed at $10.80/st, up 5 cents/st.
The Platts US OTC Broker Index for November is $10.88/st through Tuesday, with three trading sessions remaining. December rolls into the front position on October 27.
Should the November average settle below $10.95/st, the index will have declined in price for the sixth consecutive month.
In Tuesday's swap trading, the December contract was seen trading at its lowest level this year.
PRB 8,800 financial December traded at $11.20/st for 10,000 st twice and 15,000 st. The contract was last seen trading on October 16 at $11.30/st.
In 2015 terms, the Q1 2015 strip was seen trading above the low of $11.70/st seen on September 3. The swap traded at $11.80/st for 5,000 st/month twice on Tuesday.
In spreads, PRB 8,800 financial Q1 2015 over Q2 2015 traded at minus 55 cents/st for 5,000 st/month three times. The last seen trade was on April 21, when the spread traded at minus 15 cents/st.
PRB 8,800 financial front-half 2015 over back-half 2015 traded at minus $1/st for 5,000 st/month. This is slightly higher than the last seen trade of minus 95 cents/st on October 15.
PRB 8,800 financial Cal 2015 traded at $12.45/ts for 5,000 st/month.
In options, Cal 2016 financial with a strike price of $17/st traded at a premium of 20 cents/st for 60,000 st/month.
Separately, no trades were seen in the Illinois Basin futures contract, which was launched by CME Group on Monday.
"Hard to see whether the producer support will come, especially if someone else isn't trading it first," said a market source.
"That's why we aren't chasing that market... there is no volatility at all," the source added.
