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Walter Energy, Inc. Common Stoc Message Board

  • blackboxfund blackboxfund Aug 29, 2013 7:30 PM Flag

    What a big Met Coal oversupply of 25 MM tons? Probably Met pricing is really just more of a AUD/USD driven issue.

    Only a 3% oversupply ...

    Global steel production is dependent on coal – around 68% of total global steel production relies directly on inputs of coal. 761Mt of coking coal and Pulverised Coal Injection (PCI) coals are used in global steel production, which is around 12% of total hard coal consumption worldwide.

    In 2011, world crude steel production was 1,518 million metric tons. This was an increase of 6% compared to 2010 and a new record for global crude steel production.

    Currently almost 70% of global steel is produced in Basic Oxygen Furnaces (BOF). Coking coal is converted to coke, which is then used in the blast furnace to smelt iron ore. The resulting molten iron is then taken to the BOF, where steel scrap and limestone are added. A stream of high purity oxygen is blown through the molten bath to remove impurities, leaving almost pure liquid steel.

    About 770 kg of coal are required to produce 1 tonne of steel in this production route.

    Sentiment: Strong Buy

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    • good stuff blackbox and onepoint. Good basic stuff. Walter Energy used to be Walter Industries and besides owning this coal and some also owned US Pipe and Foundary which did exactly as you describe. It also transported its coal to its coke ovens at Sloss Industries where they produced the coke and associated solvents driven off and captured in the process. After the coke was used in steel making down the road at US Pipe....the slag came back to sloss industries where it was made into fibers used in those fire retardant ceiling tiles. A pretty vertically integrated company. Now its just Walter Energy...and just met coal...with a ltitle bit of thermal coal and nat gas. Looked like a good move at the time, but not now. The world geared up to supply the huge chinese push into steel demand....only to be left holding the bag. It will eventually come around....but probably without Walter Energy. Oops.

      Oh yeah, forgot to mention aluminum, titanium, and carbon fiber are stealing market share from steel everyday. If you think steel is going to make a rebound...may I steer you to the biggest steel producer in the US....Nucor steel.

    • Coal, being a hydro-carbon (predominantly consisting of hydrogen and carbon) provides the carbon needed to fill the interstitial spaces between the iron atoms. This matrix of iron and carbon is what makes steel a stronger, tougher (less brittle) material than cast iron. Alloys of steel, like stainless steel for example, has chromium atoms replacing some of the carbon.

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