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Hot summer weather and pricier gas have increased optimism in US Illinois Basin coal markets, although offers are still abundant and buyers limited, sources said Friday.

One southeastern US fuel buyer said coal generation has increased this summer, and projected that there would be more coal generation next year than this year.

"That may vary, but we're going to be making some purchases," the buyer said.

While demand has increased, producers were heard to be reluctant to lock into lower-priced deals for longer-term contracts, but were still giving good deals on one or two-year contracts, a utility buyer said.

"Prices jump up in that third year," he said. "They don't want to lock in those lower prices."

More prompt-quarter (Q4 2016) spot interest also was heard.

Buyers quoted prices in the low to mid-$30s/st for the ILB Cal 2017 11,500 Btu/lb low chlorine barge coal, while a seller quoted prices in the high $30s.

A second producer noted a trickle of requests for proposals starting to enter the market, including one from PowerSouth Cooperative issued last week and at least one more expected later this month.

"This summer has been really good for most utilities in coal burn and a fair amount of spot activity," one ILB coal buyer said. "Hopefully, we have a cold winter ahead."

S&P Global Platts assessed prompt-quarter (Q4) ILB 11,500 Btu/lb, 5 lbs sulfur, low chlorine coal at $33.60/st, up $1.60, and assessed Cal 2017 coal at $34.50/st, up $1.40 from the previous week.