In doing this he was able to get a better understanding of the conflicting forces driving the two basic forms of coal, thermal and metallurgical, in different directions.

Thermal coal is certainly feeling the heat (forgive the pun) of lower prices amid reports of Chinese buyers rejecting some shipments as they bargain for discounts. Whether true, or not, it does seem buyers are exerting their power in the market for electricity-producing coal.

Metallurgical coal is also facing a potential slide in demand as China’s rate of steel production slows. Offsetting any slowdown in orders from China though is the countervailing force of supply disruptions at the world’s biggest producer of steel-making coal, the BHP Billiton Mitsubishi Alliance in Queensland.

Long-term coal business participants have no trouble understanding the differences in the coal market. However, where they might struggle is in the differing views of major coal producers and the consultants who independently track the coal market.

Last week, as the thermal and metallurgical sectors of the industry headed off in different directions so too did the producers and one of the leading industry consultants, Wood Mackenzie.

In the same week that BHP Billiton and Rio Tinto were talking down the outlook for most of their commodities, including thermal and metallurgical coal, Wood Mackenzie was disagreeing.

The consulting firm’s leading metallurgical coal analyst Jim Truman reportedly said demand for seaborne met-coal would effectively double by the year 2030, with Australian producers accounting for the lion’s share of the increase.

Given met-coal production in Queensland is falling (not rising) thanks to a deteriorating industrial relations environment, it might be some time before Australia’s extra met-coal hits the market.

“We see Australia as potentially having the ability to capture as much as 150 million tonnes of new exports by 2030,” Truman told The Australian.

Even more significant than the extra tonnage of forecast met-coal exports was the Wood Mackenzie view of what rival exporters could expect over the next 18 years with countries such as Mozambique, Canada and Russia picking up relatively small volumes of new orders.

For Australian met-coal producers the future could hardly be brighter. That is if it was not for the ongoing industrial war being waged between unions and management. If nothing else, those workforce disputes will only drive prices higher.

Thermal coal, despite suffering today from a strong supply and sliding prices, might also have a silver lining on its cloud in the form of positive indications that India is moving back into the market with big, long-term, orders.

As with the conflicting signals from the met-coal market there were equally contradictory indications in the seaborne thermal coal sector. There have been reports of Chinese buyers refusing to take delivery of some cargoes in an effort to drive down the price, and Indian buyers becoming more active, and pushing prices up.

Confirmation of the Chinese rejecting cargoes was hard to obtain. Wood Mackenzie’s Paul Gray said he had not heard of it. Other observers said it was happening, but not on a widespread scale, and almost certainly as a bargaining ploy.

What could be measured in the thermal market last week was a fall in the European coal price thanks to weakness in the economies of several countries in that region, and speculation that material rejected by China might try to find a market in Europe.

One coal trader told Reuters that whether the Chinese were outright defaulting and refusing to take cargoes, or they simply wanted a price cut, that still rated as non-performance under the terms of a contract.

The picture in India is less uncertain. The country’s largest electricity producer NTPC said it was poised to take advantage of the lower world thermal coal price by launching a buying campaign for up to $US15 billion worth of coal over the next 10 years.

NTPC chairman Arup Roy Choudhury said he was looking for 150 million tonnes of coal, and would be offering contracts to suppliers on five and 10 year terms.

Whether India’s coal-buying plans offset China’s coal pricing games is the interesting question in the thermal market with one force theoretically cancelling the other.

The met coal market is much clearer with demand strong, and industrial action at BMA inhibiting supply, a recipe for stronger prices, and a widening gap between the two principal types of coal.