The front page headline of this months Coal Leader proclaims The Resurgence of Coal and in 2004, the outlook for coal markets, both in the near term and long term, is very good.
These extremely favorable market conditions are being driven by a number of factors including:
a strengthening economy,
low customer stockpiles,
high prices of natural gas and oil,
capacity constraints of nuclear generation,
strong coal demand for electricity generation and steel production.
Utility stockpiles have dipped below normal levels to about 15% below the prior year. Activity in both the spot and contract markets is beginning to increase and coal prices are rising. The high price of natural gas, which competes with coal, is leading to coal generation plants operating at higher levels and new coal plants are being announced at the strongest pace in the last 30 years.
Thus, the outlook for U.S. coal markets is strong and there is, at last, some potential for increased profitability for coal producers in the future. While there are production difficulties for some producers, most will benefit from the replacement of old contracts and with new commitments signed in the current market environment.
Meanwhile, as Coal Leader goes to press, there is still no Energy Bill, although, it has been announced that Senate Energy and Natural Resources Chairman Pete Domenici is bringing a revised Energy Bill to the Senate floor. Jobs have been lost in key manufacturing industries due to energy supply and natural gas shortages and the higher electricity bills for millions of American consumers must be addressed by Congress. The continued economic recovery is dependant upon reliable and affordable electricity. Coal our most abundant domestic energy source can meet our growing need for electricity by providing increasingly clean energy, improving the environment, and strengthening the economy.
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