Looking for a culprit in the coal industry’s decline? Blame China.
Mitt Romney’s new coal-pandering ad (see here) warned coal miners that Obama hated them and also jobs are going to China. Here’s the ironic twist: A slowdown in the Chinese economy may be hurting coal mines.
From the Wall Street Journal:
[T]he Chinese economy is slowing and so is its steel industry. That has sent the price of coal used for steelmaking down nearly 50% to $170 a metric ton. Those coal producers who counted on Chinese sales are reeling. …
While many have blamed the downturn in the U.S. coal industry on cheap natural gas supplanting coal and tougher environmental regulations, the slide in metallurgical coal demand has been equally devastating. Coal companies were caught flat-footed after ramping up production last year with the expectation that steep prices would cover their rising costs, despite coal’s past cyclicality. Instead, demand in China began to falter just as Australian metallurgical coal production — interrupted by floods last year — surged back into the market. …
China’s metallurgical coal imports dropped to 2.6 million metric tons in August, from an average of 4.5 million metric tons per month through July. Now coal mines are closing throughout Appalachia.
The U.S. sends a lot of coal overseas — meaning that fluctuations in international demand can really hit home. The Journal outlines some of the recent coal company bankruptcies or contractions: Patriot Coal, Alpha, Consol.
In other words, Ohio coal miners — you should be rooting for China. Create more jobs there! Produce! That’s actually a pitch Romney could make: Elect me and I’ll send jobs to China — and then companies will buy your coal.
I suspect that ad is not currently in production.
