The spot market for Central Appalachian thermal coal remains extremely soft, with not much near-term demand in sight, sources told Platts this week.
Industry players cited the continued headwinds of seasonably warm weather, low natural gas prices and high utility stockpiles as the main drivers eliminating spot demand.
No spot deals were heard by sources this week.
"With coal inventories staying high, you have to hope after we roll into the summer the market gets a little easier," one CAPP producer said. "It's not good now, but you can't come to the conclusion that no utility will buy spot. With attractive prices in the upper $30s/st and into the $40s/st, you have to look at the utilities on a case-by-case basis. Some will run as baseload no matter, but at these prices, producers are losing on deals.
"There's no illusion here; it's not going to be a bonanza on coal deals either if things pick up in the summer," the producer added. "It's going to be a tough year with more rationalization of production before you'll see prices stabilize and climb."
Platts on Friday priced its weekly CSX quality coal (12,500 Btu/lb, 1.6 lbs SO2/MMBtu) assessment at $39/st FOB rail for Q2 delivery, unchanged from last week.
Coal burn also is being reduced as coal units are being taken offline for spring maintenance ahead of the summer season, utility sources said. Even though most coal units going offline have been delegated as more of peaker than baseload generators, multiple shutdowns will further slow the decline of large stockpiles.
Data from Platts unit Bentek Energy shows coal consumption declined on the week by 502,000 st combined in MISO and PJM, the power markets where most Appalachian coal is burned.
Coal consumption in MISO dropped 188,000 st, or 6%, for the week ending March 17, and fell 314,000 st, or 13% in PJM.
