I recieved this in my inbox from another company that I am watching....
An article by Mark Burgess has outline some Met Coal numbers that are showing it is in demand and supply is tight.
Inside Coal
Issue #18
April 15, 2010
Global Scene
By Mark Burgess
mburgess@energypublishing.biz
Xcoal, Thrasher take stage in China
It’s not unusual to find XCoal’s Ernie Thrasher strolling along the beach at 3 a.m., cell phone ear bud in place, making a deal somewhere on the other side of the planet. And he’s been known to return a journalist’s telephone call at 8:30 a.m. on a Sunday morning or at 7:30 p.m. on a Saturday night.
Recently, Thrasher put the cell phone down and went to the other side of the planet in person.
He was on hand to make his presentation “U.S. Coking Coal to the Chinese Market: A Seismic Shift in the Global Coking Coal Market” at the CoalTrans China conference in Beijing. It was his chance to explain his thoughts on the global coking coal industry and his company’s recent venture into anthracite.
As usual, the numbers were interesting.
“We expect anthracite prices to be equivalent to, or exceed, the benchmark price for hard coking coal in 2010,” Thrasher said in his talk. “Xcoal will export 300,000 tons in 2010 and 1 million tons in 2011 from Baltimore, USA.”
Thrasher justified his timing for a leap into the anthracite business for a couple of different reasons.
First on the list was the fact “anthracite demand is growing due to increased industrial activity, met coke shortage, coke breeze shortage, and increased use in the sintering process.”
Other factors were “drastically reduced” anthracite supplies for seaborne trade because of increased domestic demand in China and Vietnam, and the fact “anthracite will no longer be priced at a discount to bituminous coking coal and/or coke.”
Thrasher and Xcoal set its Asian coking coal business soaring when a joint venture agreement was made with CONSOL Energy to sell its Northern Appalachian product into the Asian market. Most recently, Xcoal made a deal with US miner Atlantic Coal to market its anthracite production. Atlantic is a small player, but the Xcoal deal provides room for growth.
Sales into the Asia-Pacific region account for approximately 80 percent of Xcoal’s business and contract tonnage has increased “significantly” since 2004.
Thrasher has the transport and “logistical supply chain” in place to make deals. Now what he needs is a continued world-wide economic recovery.
He made it clear in his presentation that “world economies have moved from ‘contraction’ to expansion and a global recovery in manufacturing appears to be accelerating.” (See chart from his presentation on page one).
Steel production in North America fell more than consumption, but has since the economic downturn recovered quickly to 75-80 percent of the 2008 maximum.
The obvious result is a huge boom in U.S. coking coal demand.
“Most North American coke operations are now operating at full capacity,” he said. “ArcelorMittal is restarting batteries that were on ‘hot idle’ status.”
The obvious “prevailing coking coal and met coke market conditions” include: “low met coke inventories, current coking coal prices rising sharply, lack of international met coke supply and higher prices for imported met coke supply.”
Thrasher then broke out some of the interesting China numbers that have put the coal world abuzz of late.
- Steel production forecast to reach 600 million tons versus approximately 570 million in 2009.
- Apparent steel demand forecasted to reach 610-620 million tons in 2010, an increase of 8-10 percent over 2009.
- Coking coal production in China cannot support this increased demand. Rapidly soaring demand signals sustainable market for imported hard coking coal.
- China imported 34.5 million metric tons of coking coal in 2009, an increase of 403 percent. At the same time met coke exports dropped 95 percent.
- The majority of gain came from Australia, up from 1.35 million metric tons to 22.7.
- January shipments from the U.S. to China total 0.3 million metric tons compared to one panama in Nov. 2009 and nothing in December 2008.
Still, Thrasher concedes problems on the U.S. production and infrastructure side of things limits possibilities somewhat.
Government regulations, high freight costs, decreased productivity, lower yields and seams more difficult to mine are all concerns, as is an infrastructure close to being stretched to the limits.
All in all, Thrasher said “mine, rail, and port capacity constraints in the USA will limit producers ability to exceed 60 million tons of coking coal exports in FY2010.”
LTC