In a sign that the world’s ship-borne coal market is tightening, more US coal is making its way to Asia, including the first coal from Utah and the Powder River Basin. A cargo is being delivered via Westshore terminals at Vancouver, Canada according to market sources.

Utah coal has never before moved through Westshore, the largest dry bulk terminal on North America's West Coast, and Powder River Basin has shipped there only as part of a blend, said Denis Horgan, terminal general manager.

"It's because there's such a shortage in the world market now," said John Hanou, vice president of Hill & Associates, a coal consultancy. "It tells you how desperate people are."

David Khani, manager of energy research at Friedman, Billings, Ramsey investment bank, predicted more cargoes will move from unusual origins to non-traditional destinations. "We're seeing inventories around the world depleted," he said.

The Utah coal is coming from Consol Energy's Emery Mine in Utah and is part of a deal for 750,000 short tons sold to an Asian buyer and announced earlier, Consol spokesman Tom Hoffman said. Sources indicated that the coal’s final destination will be South Korea, where it will be used to replace Indonesian power-plant grade coal. The PRB coal is being sourced from Rio Tinto’s Spring Creek mine, near Decker, Montana.

One cargo already has moved, and a second will move "very shortly," Horgan said.

The Emery coal is bituminous and is being blended with coal from another source to be sold as a steel-making coal, Hoffman said.

"Never, ever, has Utah coal gone through here before," said Horgan. "The rail rate is prohibitive, and it can only happen in a high-price scenario."

The Utah mine is more than 1600 miles from Vancouver, making the haul one of the longest ever done for export coal in the US, Hanou said.

Reported by Reuters