From the Wall Street Journal:
Japanese demand will soften near term as coal users face production outages: Tohoku Electric Power, Japan's second-largest thermal coal importer, this week suspended its coal imports because of damage to its generating plants. Spot prices for Australian coal, the source of 70% of Japanese imports, have fallen 4% this week to $123.50. But if the plants come back online coal usage could rise in the second half. Citi estimates demand for thermal coal in Japan could increase by 7 million tons this year overall.
In Europe the shift could prove quicker: Previous expectations of declining coal demand are now rapidly being reversed. Germany's decision to suspend seven nuclear reactors is key: The lost electricity generating capacity will have to be made up in part from coal, adding around 3 million tons of European imports in 2011. Deutsche now forecasts European prices could rise to $145 per ton next year, from around $122 now.
Meanwhile, the U.S. Environmental Protection Agency appears to have softened its line on coal-fired power plants this week. The EPA wants a 91% reduction in mercury emissions from power plants, which had led some analysts to predict mass shutdowns of coal-fired stations unwilling to invest in the necessary filtration equipment. Credit Suisse, for example, forecast 60 gigawatts, or 18%, of capacity to close. But the EPA now estimates that figure at just under 10GW.
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