Kelvin Schulle's  Instablog

China's $680B stimulus is boosting economy faster than many westerners expected. Q# GDP was 8.9% on a annual basis. Report that CHina may reach double digits growth in Q4 as the stimulus kicks in full speed. The 2nd largest economy in the world may reach self sustainability in 2010. G20 meeting on the weekend confirmed that stimulus around the globe will remain intact till 2011. As a result, raw materials demand pick up quickly both in China and here in US. One on the materials that is in strong demand is metallurgical coal. Part of the reason is China doesn't produce high quality metallurgical coal, or the domestic production is really low volume, and it depends on import from Australia and US to meet its demand. High quality steel products need high quality metallurgical coal. Earlier this year, China's Chinalco tried to take stake in RIO Tinto(RTP) to lock the supply of iron ore and metallurgical coal from Australia. However the deal didn't go through as Rio Tint turned to BP (BP) for help on its funding shortage.

So it is no surprise to see China widen their search to the west. Look no further, there are high quality metallurgical coal producers in US, most of them exporting to China. So China is depending on these company for supply. To names a few. Alpha Natural Resource(ANR), Massey energy(MEE) and BP PLC(BP) are all seeing strong demand from China well into 2010. Alpha Natural resource is particularly interesting. Can any Chinese company takes a stake in these companies to lock metallurgical coal supply for the nation? We will see. President Obama's visit to China may shed some light on how the two nations can promote free trading to jump start the global recovery.

Disclosure: no position