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Strategies & Market Trends : Commodities - The Coming Bull Market -- Ignore unavailable to you. Want to Upgrade?

To: craig crawford who wrote (205)	6/12/2001 3:54:32 AM
From: craig crawford	Respond to of 1643

Washington--(Platts Coal Trader)--11Jun01 Although natural gas prices have declined significantly, they are still at levels which should have little if any effect on coal prices in the short term, according to a natural gas market analyst. Natural gas prices should remain in the range of $4-$6/MCF through 2003, noted David R. Hammond, a consultant with Hammond International Group at the Western Coal Council Spring Forum in Salt Lake City last week. Hammond contended that a continuation of relatively higher natural gas prices would continue to support higher coal prices between 2001 and 2003. Hammond said that the US natural gas industry "is on a treadmill just to replace gas production." Natural gas prices increased sharply during the cold weather of late 2000 and early 2001. But other factors, such as reduced gas in storage and declining production rates in key natural gas supply areas, will not be resolved in the short run, Hammond said. He further contended that gas price volatility is "of great concern to utilities," with the result that coal could benefit from the situation. "Have the utilities been scared enough in the last year about gas? I think they have. I think they are reassessing their positions, and that bodes well for coal," he said. Power generators may also be rethinking longer-term decisions in light of continuing problems in natural gas production. Hammond voiced skepticism that US gas producers could increase output to the anticipated demand of just over 30 trillion cubic feet (TCF) by 2018 because of infrastructure problems in the industry. The US produces about 20 TCF of gas per year. Hammond contended that after 2010, "with the new era of emission control technologies available at reasonable cost, coal will retain its 50% share of the power generation market."