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Major coal producers are making a financial recovery

Oilfield Technology,


  1. Met coal producers show signs of recovery
  2. Demand from steel producers on the rise
  3. Less optimism for thermal coal in the short-term, long-term recovery anticipated

Steel fuels met coke

Many major coal producers, including BHP Billiton, Rio Tinto, Anglo American, Xstrata and Peabody, have reported increasing demand from steel makers, especially in Asia. China is emerging as an important importer of met coal. According to Xstrata, Chinese imports are four times higher this year than in H1 2008. US producer, Consol Energy, noted that almost all of this year's met spot coal has sold out due to pre-emptive buying from China and production cutbacks. Xstrata also expects import demand from India to recover to pre-downturn levels.

Thermal coal needs more time

The reports from thermal coal producers were less optimistic. The financial crisis has dramatically reduced demand for coal-fired power, particularly in the US. According to Peabody, US coal supply-demand fundamentals remain out of balance. Anglo American reported softer demand for its thermal coal in Europe and North America due to decreased industrial production. Xstrata also noted that some utilities had switched to natural gas during the summer as the price of gas was low.

In the long-term, international demand for thermal coal will increase as demand for coal-fired power increases. According to Peabody, India is likely to be the fastest-growing coal importer in coming years, with generation growth targeted at 13,000 MW/year. Demand from China will also rise, while in the US about 17,000 MW of coal plants are under construction in 19 states. This represents 70 million tpa of coal demand, the majority of which would be served by the Powder River and Illinois basins.

Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/30092009/major_coal_producers_are_making_a_financial_recovery/

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