It's a high quality metallurgical coal producer, with good access to the Eastern export market terminals.
Export demand has risen, previously, both in metallurgical coal as well as thermal coal.
Peabody International is my only holding, a play on buoyant metallurgical coal prices the next couple of years.
American demand for this type of metallurgical coal has been relatively weak recently, says Macquarie analyst Curt Woodworth.
These will lead to increased demand for both thermal and metallurgical coal, the latter one used to make steel.
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Walter Energy ( WLT) produces metallurgical coal for use in the steel industry.
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The demand for coal, as a result, is significantly high in this region both in thermal and metallurgical coal.
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Moreover, in recent years it has forayed into the coal business and is today a significant producer of metallurgical coal.
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And for as long as the economy continues to blaze, it is metallurgical coal imports that will be stoking the furnace.
Metallurgical coal is used to manufacture steel and is therefore susceptible to the cyclical ups and downs of the steel industry.
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Consol Energy, is expected to produce about 65 million metric tons in 2010, out of which 7.6 million will be metallurgical coal.
But the big change is that in 2008, China accounted for just about 2 or 3% of the global seaborne market for metallurgical coal.
Further, says Peabody, world steel production is up 8% this year, requiring an added 75 million tons of extra hard and hot-burning metallurgical coal.
While iron ore, metallurgical coal, copper, and crude oil faced temporary supply side disruptions that boosted prices excessively, the longer-term, commodity super cycle remains intact.
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Metallurgical coal, which sells at a premium to thermal coal, is also seeing some weakness in demand due to slowing growth in China and Europe.
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Global steel production is expected to rise more than 30 percent during that time, requiring approximately 300 million tonnes of additional metallurgical coal supply annually.
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The most important metallurgical coal basin in the world is underwater.
Alpha Natural Resources is expected to produce 12.5 million metric tons of metallurgical coal for 2010, and 24.4 million metric tons of thermal coal from Eastern production.
As for thermal coal, prices seem poised to edge up slightly because of the floods but, unlike metallurgical coal, there is plenty of thermal coal to go around.
With electricity generation up 14% this year in China and 8% in India, and global steel output expanding by 8%, demand for thermal and metallurgical coal has been steadily growing.
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The considerable increase in revenue per ton was driven by improving market prices with prices for metallurgical coal and industrial coal shipped in Q1 2011 increasing 53% and 12%, respectively.
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So we're absolutely benefiting from the fact that China's gone from a virtual non-player in the seaborne metallurgical coal market to almost a fifth of that market in just two years.
The huge size of the Chinese industry now makes it a dominant force in both the global steel market and the market for production inputs such as iron ore and metallurgical coal.
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It's operations include export terminals in Australia, where analysts expect it to produce for 2010 approximately 11 million metric tons of metallurgical coal and about 16 million metric tons of thermal coal.
This is where it should sell if the cycle timely turns, but there are no indicators as yet that better steam coal pricing or a recovery in metallurgical coal is in the cards.
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" Responding to the run-up in WLT, Li said, "Walter has outperformed its peers because it has successfully transformed itself from a sub-prime lending and homebuilding and coal business to a pure play in high margin metallurgical coal business.
And while it's true that's shrinking as a percentage of Alpha's business, because we're exporting a lot more coal this year than we have in the past, our domestic steel companies are scrambling to get coal since metallurgical coal comes mostly from underground mining.
Coal stocks fall into the energy sector even through the pivotal variable for earnings is demand for metallurgical grade coal which is tied to world steel production.
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Commodities like oil, copper and iron ore just relapsed and both metallurgical and steam coal spot prices stick in the dumps despite serious cutbacks in production, worldwide.
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