And though China’s move could have some negative implications, the restrictions seem targeted toward its major cities and don’t necessarily preclude plants from being built further out. And consumption was already expected to fall below 65% by 2017, while the amount of coal it actually burns is expected to grow. Couple that with India about to surpass China as the world’s largest coal importer, perhaps as early as next year, and foreign markets for coal remain the industry’s best hope.
Beset by chronic power shortages, India has been importing ever greater amounts of coal to fire its plants. Consumption rose 10% last year to 298 million tons and was running 23% ahead earlier this year. China consumes far more coal, but has been relying more upon domestic supplies.
That’s why Peabody Energy Corporation (NYSE:BTU) continues to believe the seaborne trade of coal will grow. Analysts say seaborne thermal coal from the U.S., Australia, and Russia rose 13% over the first six months of 2013, but they’re not as hopeful as the coal giant is. But as I’ve noted previously, not all analysts are on the same page and where a number are expecting peak coal power generation to hit before 2020, Wood MacKenzie says 2030 is the better bet because the infrastructure for alternative fuel sources isn’t in place globally to take up the slack.
It’s hard to argue that the canary is healthy, but as Mark Twain might have said, reports of its death have been greatly exaggerated.
The article Is Coal About to Get Choked Off After All? originally appeared on Fool.com and is written by Rich Duprey.
Fool contributor Rich Duprey has no position in any stocks mentioned. The Motley Fool recommends Southern Company.
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