Eastern US over-the-counter thermal coal prices fell for a fourth straight session Thursday on the back of a weaker natural gas futures market and an absence of demand, sources said.
One broker said the weakness in the gas futures market “caused a sell-off” in the coal market, adding that the market sidestepped any bullish knock-on uncertainty from a Malaysian Airlines jet being shot down in Ukraine.
The NYMEX August gas futures contract settled at $3.954/MMBtu, the lowest front-month close since November 29, 2013.
He added that due to that weakness, the financial market might start disconnect from the physical market, with the physical market starting to “not be representative of the general market.” He said this did not happen often.
A second broker agreed that a floor was “starting to get established” as there were no bullish factors to prop prices higher.
In the Western US coal market, three physical August Powder River Basin 8,800 Btu/lb deals went through — two at $11.60/st for a combined total of three trains of 15,000 st each, and one at $11.65/st for one train.
The first broker said PRB prices were beginning to be “unprofitable” for producers as the front-month contract was approaching the “mid $11/st” level.
He said this was a factor of miners having “too much coal left over that they have to get rid of” coupled with a lack of demand to absorb it.
The trader agreed, adding that “until rail service improves, spot prices will languish” and producers might need to purchase their own tonnages back from the OTC market.
The trader said the PRB market was not affected by the plane crash in the Ukraine as the market was “disconnected” from European fundamentals.
He said this was due to there being “less participants, traders and speculators” active in the market and lower tonnage heading to Europe.
Platts assessed the front-month August contract for the physical PRB 8,800 Btu/lb contract at $11.65/st, up 10 cents day on day.
In the financial market Thursday, a Q4 2014 CSX Central Appalachian contract (12,500 Btu/lb) traded at $58/st for 5,000 st/month.
Also, an August deal went through at $58.25/st for 10,000 st and September traded twice at $57.75/st for a total of 15,000 st. Physical August CAPP CSX traded at $57.75/st for one train (11,000 st).
In the physically-cleared CAPP barge market, an August trade went through at $60.20/st for five barges, October traded at $59.90/st for 15 barges and November traded at $59.90/st for eight barges.
After the Platts 2:30 pm EDT (1830 GMT) Market on Close assessment process ended, the CSX CAPP Q4 2014 contract went through at $57.75/st for 10,000 st/month.
The deal was not taken into account in Platts assessment.