Muted Met Market Reaction From Longview Mine Fire
However, HVA Discount Likely to Tighten Over Time
It’s hard to believe I’ve had to take time out to write not one, but TWO market analysis updates due to coal mine fires in just a few days, but here we are. It serves as a humble reminder that the mining business is incredibly hard, and the folks who do this job face danger each and every day. Although we are concerned for the economic health of both the company and the families affected by the outage, we are also thankful to hear that workers were evacuated safely and no injuries were reported.
As to the accident itself, all we’ve heard is that some foam void fill material ignited as workers were attempting to secure the area around a roof fall that happened at the operation back in mid-May. Attempts to mitigate the fire reportedly continue, with crews drilling to inject both water and nitrogen from the surface.
Although we don’t know specific details yet, the nature of the accident is similar to one that happened at Peabody’s Shoal Creek Mine last year. That fire resulted in an outage which lasted about 3 months until activity resumed, and 6 months until production normalized. Should that prove to be the case here, the market is looking at about 0.5-1.5 million short tons of high volatile metallurgical coal out of the market for 2024, or 3.5 Mst per year should it prove to be out for longer.
So far, US high-volatile metallurgical coal markets remain muted, which believe it or not makes some sense. It is quite seasonally typical of the Atlantic Basin spot market to be quiet this early in July, as quarterly budgets in India have barely been open for 48 hours, China, Europe and Brazil won’t come into the market to restock until August or September, and the US is just getting their annual procurement process started.