Bristol, Virginia-based Alpha Natural Resources has idled its underground coal mine in Boone County, West Virginia due to weak demand for steelmaking (metallurgical) coal, according to national news reports. In addition to demand, prices were cited as a factor in the mine's closure, in addition to overall challenging conditions.
In its quarterly financial report in early May, Alpha was candid about the coal market, explaining that "Chinese steel production is projected to grow between 4 percent and 5 percent in 2013, and any uptick in Chinese imports should lead to improved conditions for the seaborne met market. Steel production in Europe during the first two months of 2013 was down approximately 5 percent year-over-year, reducing demand for metallurgical coals in the Atlantic basin and weighing on the prices of US exports. The supply/demand picture for lower quality met coals remains imbalanced, and these coals are being discounted, pressuring margins which may trigger additional production cutbacks. In general, conditions in the metallurgical coal markets remain challenging," adding that "met coal is a highly cyclical and volatile product."