July 29, 2009 / 8:09 PM / 10 years ago

Coal miner Massey Energy sees chance to boost exports

NEW YORK, July 29 (Reuters) - U.S. coal miner Massey Energy Co MEE.N sees opportunities to export more coal to Europe and Asia as global steel production and power generation are starting to pick up, its chief executive said on Wednesday.

“We are obviously encouraged by the positive news we are hearing out of the Asian markets,” Don Blankenship told Wall Street analysts. “China reported economic growth of 7.9 percent in the second quarter.

“We have seen some estimates recently that China may be a net inporter of as much as 50 million tons of met (steel-making metallurgical) coal for the year. This news has helped solidify and improve met coal prices,” he said on a conference call to discuss Massey’s second-quarter earnings.

Blankenship noted Indian steel production was up 9 percent in May from a year earlier and total production for the first five months this year exceeded the same period last year.

“As a result, we are seeing increased demand for our met coal products in this important market,” he said.

Asked how much of the roughly 40 million tons a year Massey produces would be exported, Blankenship said: “I would say we’re going to get close to 50 percent moving to Asia as opposed to sometimes there wasn’t anything going to Asia.”

But the company would not ship coal directly to China. “Main destinations that would be projected...would range from Korea to India to anywhere in the (Pacific) Rim. But we don’t want to say too much about exactly where, but India obviously would be the bigger one.”

Blankenship said reports from India suggest stockpiles of thermal, or steam coal, at power plants are as low as two days in some areas.

“They’re increasing and overall economic growth will inevitably lead to increasing thermal coal imports.

“As China and India consume more coal, we believe our opportunity may be greater to sell our coal directly into these markets or to displace Australian and South African coal in the market,” he said.

Massey was well positioned with product, proximity to ports and the ability to ramp up production quickly to take full advantage, said Blankenship.

Massey shares rose more than 7 percent on Wednesday to $24.35 in afternoon trading on the New York Stock Exchange after it posted better-than-expected profits on Tuesday.

The miner said it expects 2009 produced coal shipments to be between 38.5 and 40.5 million tons, with average prices between $61.50 and $63.50 per ton.

For 2010, Massey expects produced coal shipments to be in the range of 37.0 to 42.0 million tons, with an average sales price in the range of $60.00 to $65.00 per ton. (Reporting by Steve James, editing by Leslie Gevirtz)

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