Peabody sees coal boom to continue

Global thermal coal demand will continue to grow led by Asian demand and rising needs in the Atlantic market where coal is required to backfill for declining nuclear use in Europe, world?s top coal producer Peabody Energy said on Tuesday.

Chairman and CEO Gregory H. Boyce said that electricity generation has risen 14 percent year to date in China and 8 percent in India, driving increases in thermal coal use

Nearly 700 GW of new global coal-fueled generation is planned or under construction over the next decade, representing more than 2 billion tonnes of additional annual coal use, Boyce said in a release.

According to Boyce, Chinese coal imports have risen for four successive months and officials are publicly encouraging more coal imports. China's June electricity generation increased 16 percent year over year and industrial production rose 15 percent, suggesting continued strength in the Chinese economy.

Indian thermal imports have increased approximately 45 percent year to date.

European coal generation increased 13 percent in June over the prior year as a result of nuclear cutbacks and higher gas prices, he said.

?Coal was once again the world's fastest-growing major fuel in 2010, outpacing the consumption increases in natural gas, hydro, nuclear and oil,? he added.

The same trend is also true for metallurgical coal.

"Pacific Rim growth continues to lead coal through the early stages of a demand supercycle, bolstering Australian metallurgical and pricing that continues to be near record highs,? he said.

According to him, world steel output has increased 8 percent year to date, which would equate to an additional 70 to 80 million tonnes of additional metallurgical coal demand throughout 2011.

?The company estimates that growth in global steel production would require more than 500 million tonnes per year of incremental metallurgical coal demand by 2020,? he said.

Strong metallurgical and thermal coal demand led to ongoing pricing strength, with third quarter met coal priced in line with the US$315 per tonne benchmark for quarterly contracts and July 1 thermal contracts settling near $128 per tonne.

Peabody Energy is the world's largest private-sector coal company and a global leader in clean coal solutions. Its coal products fuel approximately 10 percent of U.S. power and 2 percent of worldwide electricity. (alex)