CORRECTED - W.Virginia mine blast ups price of coal for steel

Tue Apr 13, 2010 1:01pm EDT

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(Changes 4th paragraph to correct how coal is blended to "blended with other coal" instead of "with low-vol coal", and corrects potential loss to 2 million tons instead of 2.5 million, tons)

* Energy Publishing index up 22 percent last week

* Blast killed 29, cut supply of key coking coal

HOUSTON, April 13 (Reuters) - An explosion that killed 29 coal miners in West Virginia and shut a key mine sent steel-making coal prices soaring 22 percent last week, data from an industry price-monitoring service showed on Tuesday.

The weekly Energy Publishing Coking Coal Index, last compiled Friday, rose to $241.67 a ton for the variety of coking coal known as "high-vol," up from $198.50 the previous Friday, Energy Publishing reported. The index is calculated on coal delivered to Hampton Roads, Virginia.

"The coal is among the best high-vol available in the U.S., and the loss of production is more significant - particularly to the domestic market - than the 500,000 short tons of quarterly production might suggest," Energy Publishing said.

This coal is blended with other coal to achieve an optimal steel-making blend and, because it is only part of a blended product, the loss of 500,000 tons of it per quarter could cut U.S. coking coal supply more than 2 million tons the rest of this year, said Frank Kolojeski, a New Jersey-based coal trader.

The blast on April 5 at Massey Energy's MEE.N Upper Big Branch mine, 30 miles (50 km) south of Charleston, West Virginia, the worst U.S. mining disaster since 1970, killed 29 miners and shut a key producer of high-vol steel-making, or coking, coal.

High-vol means it contains more volatile compounds than more valuable "low-vol" coal. High-vol coal yields less pure carbon than low-vol when coked or slow-heated to prepare it for burning with iron ore to make steel.

But other qualities - especially physical characteristics - also are important in steel-making coal, and the Upper Big Branch coal ranked very high overall in its utility for making steel, experts said. (Reporting by Bruce Nichols)

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