By Piers De Wilde, Joseph Clarke and Andrew Moore

August 12, 2018 - As US domestic coal markets continue to deal with low demand on account of cheap natural gas, exports remain a viable outlet thanks to strong overseas demand.

This year, exports of both thermal and metallurgical coal could make up as much as 16% of total production, which would be an all-time high, said a prominent market analyst at an industry conference earlier this week.

By comparison, when exports peaked in 2012 at 114.2 mt, it made up 12.4% of US coal production that year.

This year, total coal exports would total 105 million mt on an annualized basis, of which 47.6 million mt would be thermal coal.

In addition, the opportunity looks like it has some legs. At current Cal 19 prices, US coal would still be competitive into seaborne markets, said the analyst.

India, in particular, has developed into a strong market for US coal, where buyers have reported to have developed "a taste" for high CV Northern Appalachia coal, said a second market analyst this week.

A US trader was offering NAPP coal on a 6,900 kcal/kg NAR basis at $82.50/mt FOB. No major concerns were reported at US East Coast export terminals, with a European trader adding the situation was essentially unchanged.

The US trader reported an offer at $112.50/mt FRI Krishnapatnam, pegging dry bulk freight for a Panamax-sized vessel on the route at $30/mt.

In the Central Appalachia market, traders said CAPP coal has been hard to come by in the CIF ARA market owing to the stronger domestic market.

"There is not a lot of prompt availability for CAPP," said a European utility trader.

A Panamax vessel was booked this week from Newport News to ARA at a freight rate of $11/mt.

A second European trader said CAPP coal has been limited slightly by capacity issues at ports, reducing availability for export to Europe, leaving Russia as the dominant supplier into ARA.

A Panamax vessel was fixed this week travelling from Newport News to East Coast India at a freight rate of $33.10/mt.

Export prices for Illinois Basin coal were heard lower throughout the week as cargo availability was reported to increase.

"We see more cargoes in the market now," a European trader said. The source was indicated price levels of $65-$67/mt FOB New Orleans, basis 6,000 kcal/kg NAR.

Other traders also reported the price on a FOB basis around $65/mt, having previously been quoted levels at $70/mt FOB by producers.

Traders said despite the ongoing monsoon season in India, US high sulfur coal remains sought after ahead of other origins.

A Panamax vessel was fixed this week via the Baltic Exchange travelling from New Orleans to Hamburg at a freight rate of $16.50/mt.

S&P Global Platts assessed FOB Baltimore, 6,900 kcal/kg NAR, at $82/mt, down $2 from the prior week, and FOB New Orleans, basis 6,000 kcal/kg NAR, at $66.50/mt, down $1.50 from last week.