Trader Javelin expects 5 mil st US metallurgical coal sales, high-vol B export demand

Source:  Platts.com, https://www.platts.com/latest-news/metals/london/trader-javelin-expects-5-mil-st-us-metallurgical-26900971

©2018 by S&P Global Platts, a division of S&P Global Inc.

 

Trader Javelin Global Commodities intends to kick-start its entry into the global met coal market with over 5 million st of shipments in 2018, as it capitalizes on its joint venture with US producer Blackjewel.

Javelin will increasingly ship met coal from mining assets under Blackjewel Marketing, encompassing high-vol B, mid-vol and a high-vol A, along with third party coals, CEO Peter Bradley said in an interview.

Blackjewel Marketing -- with Javelin holding 40%, Uniper 30% and Blackjewel 30% -- allows Javelin to supply met coal in the US and for export, and market thermal in the US. Uniper will handle exports of thermal coal from the group.

Javelin will continue to work with domestic US customers of the met coals in the US and develop export coking coal markets, especially in Europe and South America.

Javelin, a global trader with links to coal assets in the US and Colombia, has developed a trading and marketing team in just over two and a half years.

Javelin has a focus on the high-vol B export markets, and is working on transportation, managing load out capacity, and tailoring qualities for long-term sales.

"We're looking to develop that export capability," Bradley said. "We're focused on building Blackjewel brands in high-vol B, and making more mid-vol available for exports."

Javelin has already made high-vol B export sales, while mid-vol HCC is currently well contracted in the US to various buyers, with the domestic market typically using annual contracts.

Prior to Blackjewel Marketing being set up, international trader Noble Group from its Houston office marketed high-vol B and mid-vol from the assets, which had expanded output in 2017 from 2016, according to previous marketing information seen by Platts.


HIGH-VOL B

The Platts US high-vol B export spot index has seen pricing rise steadily this month, on renewed international buyer interest in high-vol B and focus on qualities around limited short-term export or domestic shipping capacity.

Prices on Wednesday remained at a monthly high of $148.50/mt, which was 36% lower than the Premium Low Vol HCC price. The degree of price discount has led to more demand for high-vol B.

In 2017, Platts US high-vol B averaged 22% lower than Premium Low Vol, but with considerable volatility: the high-vol B discount to PLV ranged at 9.6%-42.5% on a monthly basis in 2017.

Javelin expects to see an increase in tailored met coal products for offer to the international markets, as it secures more marketing arrangements for trade.

Given strong international demand, the company may focus on high-vol B with access to both Norfolk Southern and the CSX railroads. This may aid logistics and flexibility for loadings at multiple terminals. Javelin plans to be able to offer other high-vols and mid-vol blends.

Blackjewel Marketing's met coal reserves are mainly in the Black Mountain Division, which produces a high-vol B and thermal coal, and in the Virginia Division, which includes straight mid-vol HCC at mines formerly owned by SunCoke Energy.

The Northern Division includes a high-vol A product at a mine idled until recently, with earlier specifications to the market promising a sub 30% volatile matter and high fluidity HCC. The BHL Division in western CAPP has some met coal reserves too.

Javelin sees a pickup in export demand for high BTU thermal coal, such as Murray Energy's coals from northern Appalachia, with industrial users such as cement makers adding purchasing.

NAPP high-vol coals such as Consol Energy's Bailey in Pennsylvania also have crossover met coal potential with blast furnace coke usage as well as in power plants and for firing cement plants.

Demand for Illinois and NAPP high sulfur coal has increased in seaborne markets, partly on Indian petcoke usage restrictions.

Potential to permit higher sulfur coals into key power, steel and cement market Turkey, along with strong emerging markets demand, have underscored US coal demand.


LONE MOUNTAIN

Javelin is marketing Lone Mountain PCI and high-vol met coal from the Virginia-Kentucky border.

This follows the acquisition of the Lone Mountain complex and Pardee preparation plant along with the idled Powell Mountain complex from Arch Coal by interests controlled by Jeff Hoops, who owns Blackjewel.

Blackjewel produces in Central Appalachia 5 million st and expects growth to 11 million st/year by 2020, including low sulfur met coal and thermal coal.

Blackjewel's CAPP reserves are 335 million st in met coal, and 314 million st in thermal coal, as of December 2017.

Javelin has grown since it was founded in 2015, shipping a range of Illinois Basin, North Appalachian, Central Appalachian and Colombian thermal coals.

Adding met coal and Powder River Basin sub-bituminous sales may quadruple overall coal sales in 2018 by volume from 2017 shipments.

Javelin's shareholders are US and Colombia mining group Murray Energy and German utility trader Uniper, along with management interests.

--Hector Forster, hector.forster@spglobal.com
--Edited by Richard Rubin, richard.rubin@spglobal.com

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