Current conditions suggest that the increase in metallurgical coal demand in China, India and Japan may very well outstrip the ability of suppliers to respond.

Mining companies, raking in big profits from suddenly sky-high coal prices, are also poised to cash-in on the booming steel industry's need for coke to fire blast furnaces.
Massey Energy Co., one of the "Big Four" US coal producers, said on Friday it is increasing production of metallurgical, or coking coal, over the next few years as demand from steel manufacturers grows, Reuters reported.
"With steel demand and prices as they are, they (steel makers) want maximum coking to run their ovens with our high- quality coke," Massey Chairman and Chief Executive Officer Don Blankenship told Wall Street analysts on a conference call. "It presents more market opportunities."
Richmond, Virginia-based Massey produced 42 million tons of coal during 2004, three-quarters of it steam coal, which is primarily sold to utilities to fuel power plants.
But 10 million of those 42 million tons were metallurgical coal and Massey expects the amount to rise to 13 million to 14 million tons in 2005.
Peabody Energy Corp., whose coal produces more than 10 percent of all US electricity, said it will use a portion of its capital expenditure this year to extend the life of mines that supply the metallurgical markets.
And Consol Energy Inc. is considering a substantial investment to expand the Buchanan mine in Virginia, which produces 5 million tons of coking coal per year.
Consol is bullish on the coking coal markets, where demand has allowed it to lock-up all current met coal production under contracts through 2007.
"We will continue to be a player in the metallurgical coal markets," CEO Brett Harvey told analysts.
The sudden enthusiasm for humble coke is due to the current boom in steel-making, which was fueled in part by China's economic growth.
"Current conditions suggest that the increase in metallurgical coal demand in China, India and Japan may very well outstrip the ability of suppliers to respond," Massey said on Thursday when announcing a fourth-quarter profit after a loss the year before.
Asked about increased production targets for metal coal, Massey's Blankenship said: "We have some of the strongest metallurgical coal in the world.
"We think the metal market will be steady to up slightly in '05. It favors us in a market where they want to run coke ovens at the highest capacity."
Only a handful of companies in Central Appalachia, where Massey mines much of its coal, have significant metallurgical coal reserves, he said.
Massey expects metal coal production of around 15 million tons in 2006 and it could go up to 18 million in 2007.
"It could expand, but we don't have market commitment for those tons," said Blankenship.
Coal prices have soared in the last two years as higher natural gas and oil prices have seen many utilities switch to coal for their power plants. For example, Eastern (U.S.) rail coal, which was selling on the spot market for around $28 in October 2002, is now going for around $58.
And there is no end in sight for the boom in coal, according to Blankenship.
"The market for coal here and abroad remains very healthy," he said.
"High gas prices favor coal as the fuel of choice. Total U.S. coal production was up 3 percent in 2004 and the demand for metallurgical coal has allowed the strong prices to persist."
But transportation problems--railroad bottlenecks and barge delays in cold weather--continue to plague coal shipments.
Asked about the coal stockpiles of utilities, he said that, on average, "they are 6 to 8 days below where they want to be and some are 20 days below."

A prolonged drought in Rwanda and Tanzania has significantly lowered water levels on Lake Victoria, affecting hydropower generation in Uganda, the Ugandan minister of energy said on Tuesday. As a result, Energy Minister Syda Bumba said, load shedding had been increased across the country.
Bumba said global warming had also increased the rate of evaporation on the lake, thus reducing the amount of water available for use by the country's two hydropower stations, Kiira and Nalubaale, near the source of the River Nile, alertnet.com reported.
"The prolonged drought in the region in both Rwanda and Tanzania, where many of the tributaries start from, has had an effect on the amount of water flowing downstream [of the] River Nile and consequently, our two power stations have been under performing by 50 MW," Bumba said. "This is a serious reduction, in commercial terms, and that is why we have had load shedding in all civic centers."
She added that every producer was losing one day of production every four days, except for those located in the main commercial centers. "We are negotiating with Kenya for an arrangement of importing power during the day, so that we could reduce load shedding during that time and we hope to come up with something in the next two weeks," Bumba said. She did not say how much power Kenya might provide.
The Uganda Electricity Generation Company Limited had warned in a recent press statement that the load shedding was likely to increase. "At present, with demand exceeding supply capacity, we have overstretched the capacity that is available," it said.
Bumba admitted that rural Uganda was energy-deficient, but said that a few projects were at hand, including some aimed at generating 50 to 75 MW of power using municipal waste, and to produce geothermal electricity in some areas of the country.
"We hope that these sources will address the issue of over reliance on hydropower," Bumba said. "We are also looking at more hydropower from smaller rivers across the country to feed their localities with electricity."
Other projects include the 250-megawatt Bujagali dam, downstream from the current stations. This project, which would cost US $530 million, has been mired in controversy, not only for lack of competitive bidding, but also because the terms of the contract between the company and the government were not disclosed.
The project has also been opposed by environmentalists concerned that the dam would drown the Bujagali Falls.

In California, a post-energy crisis state law orders utilities to get 20 percent of their electricity from "renewable" sources such as wind or geothermal plants by 2017.

Electricity-generating wind turbines could be erected in the area of the Antelope Valley California Poppy Reserve under a proposal aimed at helping meet a California law for increasing nonpolluting energy sources.
Portland, Ore.-based PPM Energy has been contacting property owners south and west of the reserve about leasing land. Southern California Edison, under orders from state energy officials, is working on plans for a high-power line to serve the proposed wind farm, dailynews.com reported.
"We are horrified," said Milt Stark, president of the Poppy Reserve/Mojave Desert Interpretive Association, a volunteer group. "That's going to be a disaster if that goes through."
PPM Energy, which is the U.S. subsidiary of No. 1 United Kingdom wind-energy producer ScottishPower, has proposed a wind farm generating up to 200 megawatts of power at peak output--enough at maximum output to supply more than 100,000 homes.
The company hopes to get the wind farm operating in 2006, spokeswoman Jan Johnson said.
Johnson said fears about the project's potential impact on the poppy reserve are premature because the company has not decided how big it will be or where turbines will be in relation to the reserve.
"We have not yet decided on the size, the location, or how many," Johnson said.
The company has not yet submitted an application with Los Angeles County, whose permission will be required, she said.
Turbines elsewhere co-exist with tourism and natural environments, she added.
Mojave Desert state parks superintendent Craig Matson, whose district includes the poppy reserve, said the state parks department has not taken an official stance on the proposal and cannot until a formal development proposal is presented for action to regulatory agencies.
But he said: "It is a big issue for the Antelope Valley. It is a big issue for state parks. It should be a concern to everybody in the Antelope Valley."
Stark, a retired county probation officer who helped raise money to buy land for the reserve in the 1970s and published a popular book about Antelope Valley wildflowers, said two PPM Energy representatives met about six weeks ago at a Lancaster restaurant with poppy reserve supporters and local environmentalists.
The representatives said the turbines are proposed on farmland on the reserve's western border, as well as on land across Lancaster Road from the entrance, Stark said.
The representatives said there could be 130 turbines, whose blade tips would be 400 feet above the ground at their highest point, Stark said.
"They told us it would be along the south edge of the poppy reserve and the western edge," said L. Dean Webb of Lancaster, who also attended the meeting.
State law contains no controls over development outside park borders, Matson said.
Poppy reserve supporters have testified in the past for Los Angeles County to zone all the land around the reserve as unbuildable open space, from Avenue D southward between 110th and 170th Streets West to about 1.5 miles south of the reserve.
PPM Energy has eight wind farms in seven Western and Midwestern states, including California farms in Riverside and Solano counties; three more under construction in Minnesota, Oregon and Kansas; and it just bought a Virginia company that has six East Coast wind farms.
In Kansas, the firm has been sued by a coalition of conservationists, wildlife enthusiasts and ranchers trying to halt a 150-megawatt wind farm of 100 turbines on what the opponents call one of North America's few remaining stands of native tall grass prairie, The Associated Press reported.
Johnson said the company is not commenting on the lawsuit.
The firm hopes to have farms producing twice as much wind-powered electricity by 2010, Johnson said.
In California, a post-energy crisis state law orders utilities to get 20 percent of their electricity from "renewable" sources such as wind or geothermal plants by 2017.
In July, the state Independent System Operator, California's electricity-management board, endorsed construction of a 500,000-volt power line that would serve the new farm and is regarded as the first step in expanding Antelope Valley's wind-energy farms as much as sevenfold.
"Obviously PPM is hoping to help bring renewable resources to California," Johnson said.

Oil & Natural Gas Corp., India's most profitable company, today reported third-quarter net income doubled after the company sold crude oil at higher prices, generating more cash to buy overseas assets.
Profit rose to 34.93 billion rupees ($799 million), or 24.50 rupees a share, in the quarter ended Dec. 31, from 17.19 billion rupees, or 12 rupees a share, a year ago, the company said. Eight analysts surveyed by Bloomberg had forecast 37.20 billion rupees, Bloomberg.com reported.
The company is competing with rivals such as China National Petroleum Corp. to buy stakes in drilling projects from Russia to Sudan as domestic production stagnates. Consumption growth is outpacing output in India and China, boosting the cost of imports after prices rose to records last year. India relies on imports for about 70 percent of its oil, and China 41 percent.
``The company's long term story is positive as the overseas assets it has acquired will start showing results in the next two years,'' Sandip Sabharwal, who manages 13 billion rupees at SBI Asset Management Co. said by phone from Mumbai before results. ``With more overseas assets, the volume of business will grow.''
Sales rose 69 percent to 122 billion rupees.
Oil & Natural Gas raised prices to reflect gains of more than a third in international markets last year, amid concern about supply cuts from the Middle East, Russia and Nigeria and rising demand from China.
The company's average price rose to $41.25 for each barrel of oil sold in the quarter ended December, from $27.60 a barrel a year ago, Chairman Subir Raha told reporters. Every $1 a barrel rise in the price of crude oil adds $200 million in sales.
Indian companies need to boost overseas exploration and catch up with China in securing energy supplies, Prime Minister Manmohan Singh said on Jan. 17. Chinese companies, including China National Petroleum Corp., beat Oil & Natural Gas to fields in countries such as Sudan and Indonesia.
The Indian explorer has government approval to bid for assets of Russia's OAO Yuganskneftegaz, the biggest oil-producing unit of OAO Yukos Oil Co., confiscated by Russia's government to recover part of tax debt owed by Yukos.
The company will buy 20 percent of Iran's Yadavaran oil field and may also take a stake in Juffair, it said Jan. 7. The Indian company is exploring for oil and gas along with Calgary- based Antrim Energy Inc. off Northwest Australia.
Oil & Natural Gas is spending 82 billion rupees ($1.9 billion) to improve recovery from Mumbai High, its largest field off the west coast of India this year, Raha said. Production from the fields may stabilize at 270,000 barrels a day, he said.
The company expects domestic crude oil output to rise by 1 million metric tons to 29.5 million tons in the year ending March 31, 2006, Raha has said.