Foreign Demand for Coal Remains Strong - China Coal Consumption Nearly Equal to Rest of the World Combined
NEW YORK, NY -- (Marketwire) -- 02/07/13 -- Despite a steep drop in domestic demand the outlook for the coal industry remains positive as foreign demand continues to grow. The U.S. Energy Information Administration (EIA) recently reported that China coal consumption is nearly equal to the rest of the world combined. Research Driven Investing examines investing opportunities in the Coal Industry and provides equity research on Arch Coal Inc. (NYSE: ACI) and James River Coal Company (NASDAQ: JRCC).
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The EIA reported that China's coal consumption increased 9 percent to 3.8 billion metric tons in 2011, which was its 12th consecutive yearly increase. China now accounts for approximately 47 percent of global coal consumption. The EIA has stated that China has accounted for 82 percent of the growth in coal demand since 2000. According the International Energy Agency, China was not only the largest coal producer in 2011, accounting for roughly 46 percent of global production, but also the largest importer, importing approximately 177 million metric tons in 2011.
"[There are] enhanced opportunities for exports of American coal to China to feed some of that demand," says Heath Knakmuhs, senior director of policy at the U.S. Chamber of Commerce's Institute. "While China does have significant internal coal resources they're often far away from load centers. It does provide an opportunity for American coal suppliers -- especially those located in the western U.S. to export enhanced amounts to China."
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U.S.-based Arch Coal is a top five global coal producer and marketer, with 157 million tons of coal sold in 2011. The company's core business is supplying cleaner-burning, low-sulfur thermal and metallurgical coal to power generators and steel manufacturers on five continents. Shares of the company fell sharply earlier this week after reporting a larger-than-expected loss of $295 million in the fourth quarter, compared to a net income of $46 million in the previous quarter.
James River Coal Company mines and sells metallurgical, bituminous, steam and industrial-grade coal through eight operating subsidiaries located throughout Eastern Kentucky, Southern West Virginia and Southern Indiana. In 2011, the company produced a total of 10.3 million tons of coal, with approximately 63% coming from underground mines.
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