Wednesday, April 27, 2011

Posco (PKX) (AHGP) (ICO) (CLD) Close Mixed as Thermal Coal Demand Soars

Alliance Holdings GP, (NASDAQ:AHGP), International Coal Group, Inc. (NYSE:ICO), Cloud Peak Energy Inc. (NYSE:CLD) and Posco (NYSE:PKX) close mixed as surging demand from China and India for thermal or steam coal, and to a lesser extent, coking or metallurgical coal, is pushing the price of coal up, as well as the share price of those coal companies and companies with coal exposure like ... who provide the needed energy source.

IN 2011 India should import about 60 million tons of thermal coal, a 17 percent increase over 2010's 47 million tons. China is expected to import about 70 million tons of thermal coal in 2012.

Thermal coal is used to generate electricity while coking coal is used to run steel plants.

Overall, thermal coal demand is projected 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, soaring over 30 percent to a record, as demand from China and India climbs and Japan increases 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 similar to what other analysts have also projected for thermal coal prices in that time period.

Head of Rio Tinto Group’s Coal & Allied Industries Ltd. 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.”

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