Growing demand from China and India for thermal or steam coal, and to a lesser degree, coking or metallurgical coal, is driving the price of coal up, as well as the share price those coal companies and companies with coal exposure like L&L Energy (NASDAQ:LLEN), Yanzhou coal mining Co. (NYSE:YZC), Westmoreland Coal Company (AMEX:WLB) and Rio Tinto (NYSE:RIO), who provide the needed energy source.
IN 2011 India is expected to import about 60 million tons of thermal coal, a 17 percent increase over 2010's 47 million tons. China is estimated to be looking at importing about 70 million tons of thermal coal in 2012.
Thermal coal is used to generate electricity while coking coal to run steel plants.
Overall, thermal coal demand is estimated to surpass 7 billion tons in 2011, according to U.S. coal producer Peabody Energy Corp. (NYSE:BTU).
Thermal coal will probably grow faster than oil and gas in 2011, increasing over 30 percent to a record, as demand from China and India soars and Japan adds to its imports to make up for nuclear power lost after the recent earthquake.
Daniel Brebner, an analyst for Deutsche Bank (NYSE:DB) in London, said in the early part of April, that thermal coal will average $132 a ton this year and $145 in 2012. Those prices are close to what other analysts have also projected for thermal coal prices going forward.
Head of Rio Tinto Group’s (NYSE:RIO) Coal & Allied Industries Ltd. (CNA) unit, Chris Renwick, said, “We expect strong demand growth in China and India will continue throughout 2011 and the long-term prospects are also bright. Our traditional Asian markets have returned to pre-global financial crisis demand levels.”
Rio Tinto closed Thursday at $73.14, gaining $1.30, or 1.81 percent. Westmoreland Coal Company ended the day at $17.05, up $0.37, or 2.22 percent. Yanzhou coal mining Co. closed at $37.99, jumping $0.29, or 0.77 percent. L&L Energy closed the session at $7.28, rising $0.22, or 3.05 percent.
Monday, April 25, 2011
L&L Energy (LLEN) (YZC) (WLB) (RIO) Close Up as Thermal Coal Demand Explodes
Labels:
Coal Demand,
LL Energy,
Rio Tinto,
Westmoreland Coal,
Yanzhou Coal
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