US coal prices pass $100 a ton, twice last fall's

By Bruce Nichols

HOUSTON, May 9 (Reuters) - U.S. benchmark coal prices have passed $100 ton, twice levels of last fall when a world supply shortfall began driving markets, traders said Friday.

May CSX (CSX.N) railroad coal with less than 1 percent sulfur settled at $102 a short ton Tuesday. May NYMEX barge coal with 1 percent sulfur ended at $100.50 a ton Thursday.

Prices as recently as last September were in the $50 range for both.

New upward pressure has come from U.S. utilities seeking to secure supply in the face of rising export demand, traders said.

"We're starting to see more and more domestic utilities come in and support values and make sure they've got quantity," a trader said.

"The challenge is there's not a lot of high-quality coal left," he said.

Southern Company (SO.N) has moved into the market in a big way in the past two weeks, seeking long- and short-term coal for four utilities in its southeastern U.S. system.

Southern seeks up to 18.5 million tons of domestic or imported bituminous coal for up to four years beginning next January for power plants in Florida and Mississippi.

Southern also wants 6 million tons of bituminous coal for three years starting in 2009, and 500,000 short tons for the second half of 2008, for plants in Alabama.

The company also is taking bids to supply 500,000 tons of sub-bituminous coal for a Georgia power station in the second half of this year.

The surge in U.S. prices began because of export demand, with Europe seeking to replace South African coal that shifted into the booming Asian market, analysts have said.

European benchmark prices in the $140 a metric ton range, and a strong energy complex in general, are pulling U.S. prices upward, analysts said.

Other U.S. coals are selling for less.

Powder River Basin coal, lower in heat content than Eastern coals and less available for export because it comes from the North Central United States, is in the $10 to $15 range.

Illinois Basin coal, high in sulfur but nearly as high in heat content as Eastern coals and available for export from the Mississippi River, is selling in the $70s.

(Editing by David Gregorio)