In the last couple of days, Cliffs Natural Resources has called back about 100 employees for its underground Oak Grove complex in response to improving metallurgical coal orders and expectations of a better market in the future.

The move follows on from Cliffs North American business unit president Don Gallagher saying in early July that the company was beginning to see preliminary signs of stabilisation in the North American steelmaking industry.

Last week major coking coal producer Teck Resources said it had settled most of its coal deliveries for the year in line with the benchmark settlement price of $US128 per tonne.

But Teck also expects to deliver 3 million tonnes this year at 2008 prices, pushing its average realised price this year to around $155-160/t.

Adding to the expectation of further metallurgical coal demand is returning production at European as well as American steel mills.

Last month, US Steel surprised some analysts when it restarted a blast furnace at its Granite City Works in Illinois after idling the plant six months earlier.

Over to east Chicago, ArcelorMittal restarted a furnace at its Indiana Harbor Works last week.

The steelmaker is expected to restart idled furnaces in Germany and France this month, while Corus is scheduled to restart an idled furnace in the Netherlands and SSAB plans to restart one in Sweden.

Arch Coal said it believed coal markets were bottoming out despite the 4.2% decline in national power generation this year up to the third week of July.

"We believe coal fundamentals are poised to improve over the next 12 months and we remain very bullish on coal markets over the intermediate and long term," Arch chairman and chief executive officer Steven Leer said.

"A growing US population and rising GDP will increase power demand, while ongoing rationalisation of high-cost coal mines should lead to a healthier supply equation.

“New coal plants that start up in the next 40 months will also boost domestic coal demand by an estimated 55 million tons annually. Additionally, a sustainable US coal export market could develop as global coal consumption growth has continued to outpace growth in other fuels since 2000."

Before its recent merger with Foundation Coal, Alpha Natural Resources said it was seeing improving metallurgical coal markets.

"While global business conditions certainly aren't anywhere near where they were at this time last year, we have seen encouraging early signs of a turnaround in the steel markets and renewed interest from coal buyers, which had been mostly absent to this point," Alpha chairman and CEO Michael Quillen said.

Foundation Coal, prior to the merger, said it had inked a favourable settlement with Arcelor and another significant metallurgical coal customer, saying the deals had boosted the company’s committed price realisations for 2010 and 2011.

While Macquarie analysts see that much of the growth in metallurgical coal demand is a result of steelmakers reaching the end of their destocking, they also expect some recovery in end-user demand.

Macquarie has consequently forecast European steel production to be up 4.7% in the current quarter compared to the previous, and up another 15% quarter-on-quarter for the last three months of this year.