This week's $3/mt rise in second-quarter premium hard coking coal prices could open up new markets for Colorado's Western bituminous coal producers, sources said Thursday.
Negotiations between Japanese steelmaker Nippon Steel & Sumitomo Metal Corp. and miner Anglo American resulted in the first benchmark increase in 10 quarters. The Q2 FOB Australia price settled at $84/mt.
Colorado producers have seen interest from Japanese buyers in their output, which typically has heat values above 11,000 Btu/lb and 0.8 lb sulfur.
"The Japanese like Colorado coal because of the higher heat and lower sulfur," a Western coal producer said. "It's typically very expensive for them and they have not been in the market, but they're starting to take notice."
The strengthening Australian dollar also could be helping US producers, the source said. The US dollar is trading at roughly 75 cents on the Australian dollar, compared with 71 cents a few months ago.
"There's still a gap, but the gap is narrowing and some of the traders are taking notice," the source said.
Another Western bituminous coal producer has also been hearing inquiries from Japanese buyers, he said.
"We've heard some of that," he said. "They're taking a look at it, but we have not transacted anything."
Colorado's thermal coal markets have been hit hard by many factors, including cheap natural gas and high inventories, the source said.
Some Eastern US utilities are asking for deferrals on existing contracts, he said.
"What's affecting the Eastern markets is affecting Colorado as well," he said.
Platts assessed Colorado prompt quarter (Q2) 11,000 Btu/lb coal at $25.50/st, and assessed Colorado 11,700 Btu/lb coal at $29/mt. Both assessments were unchanged.
In the Utah market, some utilities are burning less coal due to low hydro and natural gas prices, but utility coal burn is expected to pick up during the summer, the second source said.
"We expect on an annual basis that our forecast projections will hold," he said. "We don't expect much of a loss this year."
Platts assessed Utah 11,500 Btu/lb, 0.8 lb sulfur bituminous coal at $35.50/st for Q2, unchanged week on week.
