US expected to lead global consolidation trend

The U.S. is expected to lead a wave of consolidation in the coal industry, as years of depressed prices take their toll, with no end on the horizon.

The coal market has been suffering from oversupply since 2012. Prior to this date, the industry made bold decisions on expansions and new projects that boosted global output, but demand failed to maintain the same pace.

In the US, the dollar's strength has hindered global competitiveness in addition to other domestic challenges, prompting potential deal activity.

Weak power and gas prices in recent years have made it uneconomical to upgrade old coal plants to meet stricter environmental rules.

Therefore, US generators expect to shut about 22 000 megawatts of coal-fired generation in 2015.

According to traders and miners, asset owners had unrealistic ideas about valuations until recently. Attitudes are now starting to change on diminished confidence about a turnaround in prices.

Edited from source by Joseph Green. Source: Reuters

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