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Bullish outlook for US thermal coal export market - Xcoal

Coal News - Published on Thu, 07 Jun 2018

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Platts reported that US thermal coal export market is set to thrive in 2018 owing to higher global prices, specifically a favorable arbitrage into Europe, the president of US trading company Xcoal said at an industry gathering Monday.

Xcoal president and chief commercial officer Jack Porco said in a speech at Coaltrans Poland said that "The US [coal] industry is alive again.” He said that the US has been benefiting from higher global prices, especially the CIF ARA price, in recent months.

Mr Porco said that in 2017 the US saw its first increase in production in over five years, adding that unlike other producing nations, the US can handle a significant export capacity as it already has infrastructure in place from previous years of large export volumes.

Mr Porco, highlighting how Central Appalachian coal in particular had benefited from a higher CIF ARA price, having more than trebled in 2017 said that "At today's price, the US can participate from every basin.”

With exports out of the US for all types of coal at 89.5 million tonne in 2017, he said he expected this year's figure to be around 93 million tonne.

Mr Porco said that "We see increased US demand in Europe, pointing out that a wide FOB Newcastle-CIF ARA spread has seen traditional suppliers to Europe, such as Colombian sellers, move to the Pacific markets.

Other attractive features of selling into Europe has been the less steep backwardation in the CIF ARA futures curve (highlighting the Q3/Q4 spread currently). Porco said this has meant buyers in Europe have been willing to commit to more forward business for up to and over nine months, which he said has been something he has not seen in recent years.

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Posted By : Nanda Koijam on Thu, 07 Jun 2018
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