TORONTO (miningweekly.com) – US miner Peabody Energy has seen already-strong Asian markets become “red hot”, as demand for metallurgical and thermal coal strains supply, president Rick Navarre said on Tuesday.

“The demand for met and thermal coal from the industrialisation of developing countries will continue to outpace the supply for the foreseeable future,” he told analysts and investors on a conference call.

Navarre described the mood in Pacific coal markets as “bullish”, while the domestic US market is “brightening”, as inventories are drawn down, he commented.

Metallurgical coal supplies are tight, and customers are pulling forward shipments where possible, and paying premiums for prompt deliveries.

Peabody, which mines steam and steelmaking coal in Australia and the US, also recently sold some metallurgical coal on the spot market to Chinese buyers at more than $200/t, Navarre added.

This is compared with the April 2009 settlements of $129/t for high-quality hard coking coal.

“This obviously tells you how tight the supply situation is and bodes well for the pending settlements for the coming year,” Navarre said.

China's total coal imports more than tripled in 2009, reaching 125-million tons, while India reached record coal import levels of 80-million tons.

“It's clear that China, India and emerging Asia remain at a full-throttle growth pace that continues to dwarf the US and Atlantic,” Peabody CEO Gregory Boyce commented.

China is “the major force reshaping global resource markets”, he said.

Boyce asserted that the strong demand levels from China are sustainable.

“We are in a new paradigm and I am convinced that China will remain a significant importer based on domestic needs, strategic intent and aggressive actions to acquire resources beyond its borders.”

In 2010, some 60-million tons to 70-million tons of coal production or imports will be needed just to replenish low inventories in China and India, not to mention the hundreds of millions of tons needed to satisfy added power plants and steel mills, Boyce said on the conference call.

BETTER THAN EXPECTED

Peabody reported fourth-quarter net income of $92,2-million, which was lower than the same period of the previous year, but above analyst estimates.

The company will continue to focus on high-growth Pacific markets while expanding Australian volumes and global trading activities, Boyce said.

In 2009, Peabody sold 243,6-million tons of coal, compared with 255-million tons in 2008.

Australian volumes totalled 22,3-million tons, including 6,9-million tons of metallurgical coal and 9,6-million tons of seaborne thermal shipments, the company said.

For 2010, Peabody is targeting total sales of 240-million to 260-million tons, including trading and brokerage volumes.

Australian sales are expected to increase to between 26-million and 28-million tons, including 7,5-million to 8,5-million tons of metallurgical coal.

US volumes are expected to be 185-million to 195-million tons.