LNG Supplies Could Tighten while International Coal Prices Decline Week-on-Week
by FROM STAFF REPORTS
According to a report from the Associated Press, the National Mining Association says global demand for coal and other natural resources bodes well for the industry, particularly in developing countries.
President Hal Quinn told the AP that improvement in new-home construction and car sales in the U.S. are also good signs.
Quinn says coal is on track to become the world’s primary energy source, surpassing oil by 2015.
In the U.S., total coal consumption is expected to grow by 50 million tons over last year, due in part to cooler weather and natural gas prices that the Energy Information Administration predicts will jump 22 percent, according to the AP report.
Long-term, the NMA expects industry to benefit from the construction of larger, modern coal-fired power plants, the AP report added. It says at least 100 million tons of production lost with the retirement of old plants will eventually be recovered.
NYC-based PIRA Energy Group also reports that international coal prices declined week-on-week. In North America, eastern power market prices weakened month-to-month, while Europe’s colder weather led to stronger day-ahead electricity prices. Specifically, PIRA’s analysis of electricity and coal market fundamentals has revealed the following:
Weak trade dynamics are offsetting the effects of stronger natural gas prices, while stock declines have yet to gain traction. Natural gas pricing still undercuts Appalachian and import coals. Coal stocks remain well above normal levels given present fuel substitution. The near-term weather outlook is a positive risk, boosting heating loads. Producer supply cuts continue to gain momentum, but will need to be material given weak demand fundamentals. Economic risks remain a concern.
The coal market moved broadly lower last week, despite very cold weather conditions in both China and Europe. The robust seasonal demand growth has been offset by continued high supply availability. API#4 (South Africa) lost the most ground last week. API#2 (Northwest Europe) and FOB Newcastle (Australia) prices also declined.
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