AP reported that coal mining companies from Appalachia to Missouri are seeing plenty of rebounding demand, just not here at home.
Fresh from reporting Q3 earnings, coal producers said that booming Asian economies are increasingly hungry for energy even as the hardest hit mining regions in the US see little prospect for a comeback in coming months.
Big coal producers such as St Louis based Peabody Energy and Arch Coal say the rising demand for metallurgical coal, a key ingredient in steelmaking is largely a foreign phenomenon.
Recently, the top US producer of metallurgical coal, Alpha Natural Resources, said that it's planning to up production 1 million tonnes 2010 to take advantage and CEO Mr Kevin Crutchfield said orders are starting to come in from Eastern and Western Europe.
Mr Charles Bradford steel industry analyst of Affiliated Research Group said that nobody is seeing any effect of the stimulus in the US. There is recovery in world steel output. That's not much help for domestic mines or US mine workers. Metallurgical coal commands premium prices but accounts for a relative sliver of US production. The bulk of US coal goes to electric power plants and they're not interested in buying these days. There have been massive piles of unused coal outside of US plants, a symptom of a country that is in a deep industrial funk.
According to US Department of Energy, as of August, electric plant stockpiles were up nearly 40% from the previous year. The recession, a very cool summer and cheap natural gas has slashed the amount of coal that power can use. Producers have now idled enough US mines to trim approximately 100 million tonnes of coal roughly 9% from production this year. 100 of miners in West Virginia, Kentucky and other key coal states have lost their jobs.
International Coal Group shuttered a West Virginia mine employing about 70 people in late September after electric utility Allegheny Energy stopped taking shipments.
Recently, Alpha trimmed another 1 million tonnes from its production guidance for mines in Wyoming's Powder River Basin. Most US producers believe things will not improve before 2010 including Crutchfield.
(Sourced from Associated Press)
