NEW YORK, NY -- (Marketwire) -- 01/12/11 -- US coal producers saw their shares skyrocket yesterday after The Wall Street Journal reported that approximately 13 million tons of metallurgical coal -- a key ingredient in steel production -- has been taken out of the market in recent weeks due to flooding in Queensland, Australia. Australia is the top export market for coal consumed by steelmakers, and following the flood reports, buyers have flocked to the US to satisfy their coal needs. The Bedford Report examines the outlook for companies in the coal market and provides research reports on Patriot Coal Corporation (NYSE: PCX) and Arch Coal Inc. (NYSE: ACI). Access to the full company reports can be found at:
The coal stocks index has surged more than 10 percent in the past month as strong demand in China and India are providing a boost to coal producers. In fact, an official with China's coal association said late last year that the country's demand for coal will continue to increase in the next five years and is expected to reach 3.8 billion tonnes in 2015. The surprising surge in coal demand has sent coal prices up to two years highs.
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On the downside, in North America, Utilities companies are being urged to lower their coal consumption for environmental purposes. Additionally, the growing North American natural gas market has drastically reduced prices to the point that it is more economical for utilities to use natural gas instead of the traditionally cheap coal. Natural gas supplies have grown exponentially in the last year as new technologies have made it easier for producers to unlock previously unreachable reservoirs in onshore shale formations. This supply/demand scenario has sent natural gas prices plummeting.
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