Spread between CAPP coal, ARA coal tightest in nearly four years

After being at a six-year high in July, the spread between Central Appalachia (CAPP) thermal coal and thermal coal delivered into Northern Europe fell to its lowest level in nearly four years Wednesday. CIF ARA 6,000 kcal/kg coal, for delivery in the next 15 to 60 days to Amsterdam, Rotterdam or Antwerp, was assessed Wednesday by S&P Global Platts at a six-month low of $85.95/mt, while rail-delivered (CSX) CAPP coal for December delivery was assessed at $77.75/st. The spread between the two grades of coal Wednesday was at 22 cents on a short-ton adjusted basis, the lowest since January 2015. CAPP rail (CSX) coal, which is roughly 6,700 kcal/kg, has long been valued by Europe for its relatively high heat content and low sulfur. But because of the significant transportation costs to ship CAPP rail coal from mines in southern West Virginia and eastern Kentucky to ports in Virginia’s Hampton Roads region and then across the ocean, the export window for CAPP rail coal can frequently swing shut. For instance, in July, CIF ARA peaked at $103.70/mt, its highest level since January 2012, and CAPP rail coal was assessed at $63.40/st, a spread of $30.67 on a short ton-adjusted basis,… continue reading

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Source: CTRM Center

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