Peabody position in International Markets.

International markets continued to strengthen in the second quarter, led by rising imports in China, India and the recovering developed economies in Asia. As a result, Australian thermal coal prices are running more than 40% ahead of the prior year and are above the prices at the beginning of both the first and second quarters. And benchmark metallurgical coal prices for the third quarter have settled more than 12% above second quarter agreements.

1. China's key statistics for the first six months of the year show power generation up 19% over 2009, with total exports of goods up 35%, steel production up 22% and vehicle sales up 48%.

2. China's year to date net coal imports through June are estimated at 70 million tonnes, nearly double the 36.5 million tonnes in the comparable prior year period. Peabody expects China net imports to set a record in 2010 given ongoing mine consolidation, rising domestic coal production costs, rail congestion, limited supplies of high quality hard coking coal, and rising electricity generation and steel mill capacity along the coast.

3. India coal imports have increased 22% year to date. Coal imports for 2010 are estimated to increase 15 to 20% above 2009's 89 million tonnes.

4. Other Asian nations such as Japan are expected to continue to rebound sharply from 2009 output. Japanese steel production is likely to rise more than 20% in 2010, while Japan's thermal coal imports through May are 13% above 2009 levels.

5. Australia exports continued at a strong pace in the second quarter, with record shipments reached at the key Dalrymple Bay port in Queensland. Australian coal exports are running 15% above record 2009 levels.

6. China and India are bringing nearly 68 gigawatts of new coal fueled capacity on line in 2010. Combined with another 20 gigawatts of new generation beginning operation around the world, new coal plants represent approximately 340 million tonnes of annual coal demand.

7. Overall, thermal coal imports in the Pacific are expected to rise 10 to 12 percent in 2010, reaching the 500 million tonne mark for the first time. Atlantic thermal coal imports are expected to decline nearly 20% as both European and US coal imports contract. Global metallurgical coal imports are expected to rise nearly 30% to approximately 260 million tonnes.

Source : steelguru.com