China has made no secret that it is in the process of diversifying its power production and, logically, through that process thermal coal will begin to represent an increasingly smaller percentage of the total energy produced.
Coal prices firm up.
There is surging demand in China, steel mills have restarted and Australian firms are struggling to fill orders for a metallurgical coal price rise to $160 a metric tonne from less than $100 a few months ago. People are also looking for freight from the US to China. Morgan Stanley analysts mention that there is spot price "momentum" toward $175 a tonne.
There’s no denying the worldwide recession has led to global cutbacks in the demand for most commodities, coal included. Coal producers like Peabody Energy have been forced to curtail production as demand slumps from both the steel industry and the energy sector.
The metallurgical coal industry is set to face significant declines in price, according to analyst’s forecasts. Bloomberg conducted a survey of a nine-analyst panel whose median forecast placed the price of coking coal at $200 a tonne by April 2009. The individual forecasts ranged from $140 to $305 a tonne.
Coal is the best commodity to get into right now. The recent global economic downturn has led to a slump in coal demand and production cuts, however serious investors are not shying away from what they see as a most opportune time.
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