Demand For Steel, Coke, Coal Heat Up With Inventories At Low

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With the global steel industry rebounding after a disastrous nine months, depleted inventories need to be replenished, which should bode well in 2010 for steelmakers and coal, coke and iron ore suppliers, industry experts said Wednesday.

Predictions by the World Steel Association indicate that the steel industry will have a healthy 2010, U.S. Steel Corp. CEO John Surma said at the Met Coke World Summit at the Pittsburgh Hilton Hotel, Downtown. The trade association anticipates global steel demand will grow next year by about 9 percent to the level of 2008.

Inventories at steel industry service centers are at historic low levels, Surma said. The industry's operating rate at the beginning of the month was just below 60 percent of capacity, down from 77 percent at the same time in 2008. The current production rate is not sufficient to meet the growing demand for steel, Surma said.

Demand for coke and coal has been robust in Asia, particularly in China and India, Surma said. The U.S. Steel chief, who just returned from an industry conference in China this week, said he sees no indication that China's "extraordinary increase in steel consumption" will slow in the near future.

"The economic environment suggests that 2010 will be a better year," as more steelmaking capacity is put into production, said Becky E. Hites, managing partner for World Steel Dynamics, an Englewood Cliffs, N.J., consulting firm.

The production of coke, made by burning metallurgical coal and used as a fuel in steel mill blast furnaces, should increase to between 25 million and 28 million tons in 2010, from the projected 15 million tons this year, said Ronnie Cecil, senior consultant on steelmaking costs and raw materials for CRU, a London-based consulting firm that has an office in Pittsburgh.

Higher demand could bring an increase in coke prices to between $200 and $250 a ton next year, Cecil said. But the market and price for metallurgical coal will be affected by what China does with a 40 percent duty it placed on its exports, Cecil said. That has boosted the price of Chinese coking coal to more than $350 a ton, thus limiting its demand on the international market, Cecil said.

"We think met coal is certainly the 'choke point' of the steel industry around the world," rather than iron ore or other raw materials, said Joseph Carrabba, CEO of Cliffs Natural Resources Inc., a Cleveland-based owner and operator of iron ore and metallurgical coal mines. Steel-producing countries such as India, China and Brazil are short on metallurgical coal, Carrabba noted.

While predicting that 2010 will be a year of recovery, no one should get "too euphoric" because "the economies we are dealing with are fragile," Carrabba said. He is "cautiously optimistic," waiting to see if the economic rebound will falter when the "stimulus bubble" bursts.

Experts Say Coke Ovens Getting More Environmentally Conscience.

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Coke oven technology in the 21st century will cut down on harmful gas produced by burning coal at high temperatures, whether its done by recovering the gaseous byproducts or burning them in the ovens, industry experts said Tuesday.

The process by which noxious gases are burned in the coke ovens "is taking off in the U.S.," because it is a simpler process and poses less risk to the environment, said Hardarshan Valia, the co-chairman of the Met Coke World Summit, which opened yesterday in the Pittsburgh Hilton Hotel, Downtown. The event, which has attracted more than 200 industry representatives from around the world, continues through Thursday.

"You can't smell the benzene or the other gases. Most of the steelmakers are going that way," said Valia, a metallurgical coal consultant and president of Coal Science Inc., a consulting firm in Highland, Ind.

Coke, produced by burning pulverized bituminous coal inside sealed ovens at high temperatures for about 18 hours, is used as fuel in a blast furnace to make steel. U.S. production of coke has dropped in recent years as the steel industry consolidated and coke production moved overseas, a result of increased demand in China and India, and stricter U.S. environmental regulations, Valia said.

Blount County Audience Voices Strong Reservations Over Proposed Return of Coal Mining

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A Canadian company called MCoal has applied to the Alabama Surface Mining Commission for an initial permit that covers 564 acres.

The company has applied to the Alabama Department of Environmental Management for a wider permit covering 3,522 acres and company officials say that future phases of their mining of the Rosa Coal seam could include underground mining.

While the current permit will not allow blasting and includes only augur mining, residents expect future phases will.

MCoal plans to hire 25 to 30 local employees and hopes to recover a total of 5 million tons over the next several years. The Rosa Coal seam is known to produce metallurgical coal, which is particularly valuable because it can be cooked into coke which is used to make steel.

The rising price of coal has sparked a renewed interest in mining deposits that had not been considered economically feasible.