By Andrew Moore, Jeff McDonald and Joseph Clarke

June 18, 2018 - In the US export market this week, a CFR deal for Northern Appalachia coal, basis 6,900 kcal/kg, for August loading was heard at a price greater than $110/mt.

NAPP coal continues to price into India as a result of relatively high coal prices, as well as ongoing uncertainty around the country's proposed ban on certain petcoke consumption.

S&P Global Platts Thursday assessed CFR India West 5,500 kcal/kg coal NAR at $102.60/mt, or $0.0187/kcal, while a delivered NAPP cargo at $110/mt, basis 6,900 kcal/kg NAR, would price at $0.016/kcal. 

Moroccan buyer Jorf Lasfar was expected to buy three 60,000 mt cargoes of 1.5% sulfur max Central Appalachia coal for July and August delivery. The utility typically buys CAPP coal on a fixed price for spot coal, but pricing for US coal was "difficult to read," given it was pricing in much cheaper than Russian coal, a second European trader said. 

"There is good demand from India as a substitution for petcoke with 3% {sulfur] coal," the trader said. 

Illinois Basin continues to move to destinations outside of Europe, to North Africa, India and South America, a European trader said. 

The trader said he thought overall pricing based off FOB Newcastle prices was "fairly unsustainable," and said, "sooner or later, we will see the market coming off."

Platts assessed Thursday FOB Newcastle 6,300 kcal/kg GAR at $120/mt, while FOB Newcastle 5,500 kcal/kg NAR 23% ash at $79/mt.

In the US, exports continue to dominate market chatter, as domestic coal burn remains anemic because of relatively low natural gas prices.

US thermal coal exports this year total 15.9 million mt through April, and would total 47.7 million mt on an annualized basis, which would the highest since 2012.

"The barge guys are starting to smell blood in the water, the freight guys; everyone wants a piece of the API2," said an Illinois Basin source.

The source pegged the sulfur discount at $12-$14/mt, and FOB New Orleans at $65-$66/mt.

While US exports have increased, supply will still be limited by domestic demand, given that producers will still prefer to sell to their core domestic customers, said the source.

On the flip side, if a producer has to move coal, the export market is a valuable outlet. A second US-based source said he heard a producer recently pulled an offer for a domestic utility tender in order to move the coal into the export market.

"I'm sensing there isn't much [IB] supply available, or [CAPP] for that matter," said the second source. 

A second European trader said prices have climbed in the Illinois Basin, with not much supply available, "even for Q4."

Platts on Friday assessed Illinois Basin coal FOB New Orleans, basis 6,000 kcal/kg NAR, at $65/mt, up $2.50 from last week. The sulfur discount was also assessed at $14.06/mt, unchanged from Thursday. 

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