W.Virginia mine blast ups price of coal for steel

HOUSTON (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.

High-vol coal is blended with “low-vol” coal to get a “mid-vol” mixture for steel-making, and the loss of 500,000 tons a quarter could cut mid-vol supply 2.5 million tons this year, said Frank Kolojeski, a New Jersey-based coal trader.

The blast on April 5 at Massey Energy's MEE.N pper Big Branch mine, 30 miles 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; Editing by Marguerita Choy