US Powder River Basin 8,800-Btu/lb thermal coal for May delivery closed 20 cents higher at $13.05/st on Wednesday, the highest level for the front month since November 23, 2011, when the price closed at $13.75/st.
PRB 8,800 physical May traded on Wednesday at $13/st for one train, and at $13.05/st for one train.
According to the latest US coal production data, output from the PRB basin last week was up year on year. Year-to-date production has been flat to year-ago levels, while Central and Northern Appalachia and the Illinois Basin have all notched declines.
Investment research firm Stifel Nicolaus said that PRB production totaled 8.4 million st in the week ended March 29, up 5.2% from the comparable period a year ago. Year-to-date through March 29, coal production in the PRB totaled 102.1 million st, flat from last year.
Year-to-date through March 28, US power generation (excluding the West Coast and New England) was up 5.1% compared to 2013, Stifel said.
CIF ARA SPOT MARKET REMAINS OVERSUPPLIED
The European-delivered CIF ARA physical thermal coal market slipped 45 cents Wednesday, as the market's oversupply continued to pressure spot prices.
Coal producers are hesitant to cut supply, capping prices, said PIRA Energy Group in its weekly coal market recap, released on Wednesday.
"Continued warm weather in Europe coupled with the return of Drummond's Colombian exports certainly deflated API#2 prices, while high supply availability in the Pacific coupled with concerns over Chinese demand weighed on FOB Newcastle pricing. Despite the unveiling of the light-on-details 'mini stimulus' in China, the coal market is expected to remain oversupplied," PIRA said.
The CIF ARA-FOB CSX spread, or implied transportation spread, narrowed to $17.28/mt from $17.58/mt on Tuesday.
US East Coast thermal coal (6,500 kcal/kg NAR 1% sulfur) was assessed down 25 cents/mt to $80.25/mt.
