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Javelin expects 5 million tons of US met coal sales, high-vol B export demand

Trader Javelin Global Commodities Holdings LLP intends to kick-start its entry into the global metallurgical coal market with over 5 million tons of shipments in 2018 as it capitalizes on its joint venture with U.S. producer Blackjewel LLC

Javelin will increasingly ship metallurgical 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%, German utility trader Uniper SE holding 30% and Blackjewel holding 30% — allows Javelin to supply metallurgical coal in the U.S. and for export and market thermal coal in the U.S. Uniper will handle exports of thermal coal from the group.

Javelin will continue to work with domestic metallurgical coal customers in the U.S. and develop export coking coal markets, especially in Europe and South America. The company 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 well contracted in the U.S. to various buyers, with the domestic market typically using annual contracts.

The S&P Global Platts U.S. high-vol B export spot index saw pricing rise steadily in February on renewed international buyer interest in high-vol B and focus on qualities around limited short-term export or domestic shipping capacity.

Prices Feb. 28 remained at a monthly high of $148.50/tonne, 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.

Javelin expects to see an increase in tailored metallurgical 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 Corp. and CSX Corp. railroads. Javelin plans to be able to offer other high-vols and mid-vol blends.

Javelin sees a pickup in export demand for high-BTU thermal coal such as Murray Energy Corp.'s coals from Northern Appalachia, with industrial users such as cement makers adding purchasing. Murray Energy is a strategic partner of Javelin.

Northern Appalachia high-vol coals such as those from CONSOL Energy Inc.'s Bailey mine in Pennsylvania also have crossover metallurgical coal potential with blast furnace coke use as well as in power plants and for firing cement plants.

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

Javelin is also marketing Lone Mountain PC and high-vol metallurgical coal from the Virginia-Kentucky border following the acquisition of the Lone Mountain complex and Pardee preparation plant along with the idled Powell Mountain complex from Arch Coal Inc. by interests controlled by Jeff Hoops, who owns Blackjewel.

Blackjewel produces 5 million tons per year in Central Appalachia and expects growth to 11 mtpa by 2020, including low-sulfur metallurgical coal and thermal coal. Its Central Appalachia reserves are 335 million tons in metallurgical coal and 314 million tons in thermal coal as of December 2017.

The story was written by Hector Forster, a reporter for S&P Global Platts, which, like S&P Global Market Intelligence, is owned by S&P Global Inc.