Thermal Coal
From IntFX
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[edit] Thermal Coal
[edit] General uses
Thermal coal is by far the most common, and cheapest coal. It is used in the production of electricity at thermal power stations. The coal is first crushed or pulverised, and then burnt in large boilers. These boilers create steam, which in turn drive the turbines that create electricity. Also, thermal coal is used as a fuel in the manufacture of cement, bricks and tiles. It is used for heating and processing, and as a raw material in the creation of chemical, industrial and household products. Due to its relative inexpense, thermal coal is also used in the process known as pulverised coal injection (PCI) in steel production. In the process, thermal coal is mixed with coking coal at a ration of about 1:5, and then pulverised down to a powder before being injected into the blast furnace during firing. The use of PCI allows steel to be produced much cheaper. The coal is used much more efficiently, and steel mill are provided with the opportunity to use cheaper thermal coal in the place of some of the more expensive coking coal.[1]
[edit] Pricing structure
[edit] Current consumption trends
Coal is widely distributed throughout the world. Coal is also abundantly available. Worldwide, the reserve-to-production ratio for coal is estimated to be 147 years, whereas the reserve-to-production ratio for oil is 40.5 years and natural gas is 63.3 years. Coal is the world's fastest growing fuel in terms of both world consumption and production. The bulk of this fuel is consumed and produced by China. Canada accounts for only one percent of the world's supply and demand for coal.
In 2006, five countries, U.S., China, Russia, Japan and India, accounted for over 50 percent of the world's primary energy demand12. Canada accounted for approximately three percent. In 2006, compared to 2000, China and India's collective share increased by almost six percent, while shares in the other countries declined modestly. Many developed countries are attempting to reduce the rate of increase in energy demand. However, consumption in developing countries, such as China, is increasing in order to fuel rapidly expanding economies.[2]
[edit] Price forecasts
Updated forecasts for '08 Asia thermal coal contract price
- Goldman Sachs JB Were $110
- Citigroup $100
- UBS $100
- JP Morgan $90
- Macquarie $88
- Merrill Lynch $80
- National Australia Bank $78.[3]
