Saturday, April 10, 2010

Coal Prices Up On Massey (NYSE:MEE) Mine Explosion

Coal prices soar after Massey mine explosion

The explosion at a Massey Energy (NYSE:MEE) mine has caused the price of metallurgical coal to increase as a tight coal market will continue to struggle with the loss of coal supply.

Now that the final four miners' bodies have been found, bringing the total loss of life to 29, it becomes the worst mining accident since 1970.

It'll take months to find the cause behind the explosions, and that will drag on the coal market for some time.

Metallurgical coal is a higher quality product, and demand is high for it, especially in Asia.

Estimates for the Upper Big Branch mine was to ship about 1.6 million tons of metallurgical coal in 2010, about 3 percent of all production in the U.S., based on numbers from 2009.

Even with increased production at other mines, Massey said it's doubtful they're be able to replace what the Upper Big Branch mine would have produced.

With spot prices already increasing by 22 percent, steelmakers will be under pressure, determined by whether or not they'll have to eat the higher prices and have their margins fall, or they are able to pass them on to their customers.

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