Coal Earnings To Gauge Strength Of Steel Recovery

TIM HUBER

CHARLESTON, W.Va. (AP) — Earnings reports from a string of U.S. coal producers starting this week should provide another gauge on the strength of the rebounding manufacturing economy.

While Massey Energy Co., International Coal Group and others are expected to report overall lackluster third-quarter numbers, the spotlight will be on metallurgical coal production from their eastern U.S. operations. Metallurgical coal is used to make coke, a key ingredient in steel manufacturing.

Recent developments such as U.S. coal companies upping metallurgical coal production suggest that demand for steel — and thus coal — is strengthening. That's certainly true for Australia and other coal producers near China and India.

But it remains to be seen whether that benefit has spread to U.S. metallurgical coal producers.

Wall Street seems to be anticipating as much. Though metallurgical coal is produced in smaller quantities than steam coal for utilities, it sells for more than double the price, often boosting profits.

"Strong September steel production figures from the country may indicate a continuation of robust metallurgical coal import demand," securities firm Dahlman Rose & Co. wrote in an industry report Monday.