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Foresight executive on coal: 'There's still too many tons in the market'

Coal markets continue to be pressured by oversupply, an executive with Illinois Basin coal-producer Foresight Energy LP said Aug. 11.

"When I look at the market right now ... it's a difficult and challenging market environment," Foresight President and CEO Robert Moore said on an earnings call. "It continues to be. It has been, and I believe that it will continue to be."

Moore said that while there has been a reduction in utility inventories, it has not been at the levels that would have occurred if there had been a hotter summer. He also blamed the difficulties on a "lack of discipline" among coal producers.

"There's still too many tons in the market, and we continue to see markets being depressed as a result of that. We're fortunate enough to have as an outlet the export market," Moore said. "We're one of the only ones that are capable of hitting that economically, and that's how we try to demonstrate discipline in the marketplace and have the luxury of moving those tons into what is now, at least in the export market, that provides for pretty decent margin compared to where we're seeing domestic opportunities."

Moore said the oversupply of thermal coal is putting a cap on prices even as utility stockpiles have declined. Getting that coal to domestic power generators has been further complicated by what he called a "lack of performance" by rail producer CSX Corp., he added.

Foresight has noted improvements in export prices as coal generation has risen in Europe thanks to hotter weather and higher natural gas prices. Moore said export volumes in 2018 are expected to be comparable to 2017 levels at approximately 5 million tons.

Foresight reported a net loss of $16.3 million in the second quarter, with 4.8 million tons of coal shipped. The partnership reported it expects to ship between 20.5 million and 22.0 million tons of coal in 2017.