Buyer Analytics

How many times have you heard this quote in the last several years? "Global demand from China is tightening supply causing market shortages and higher prices." Now coal is demonstrating price volatility.

According to the WSJ, Chinese coal demand grew nearly 9% last year, raising its share to a quarter of the world's consumption. Its coal industry roughly doubled output from 2001 to 2006, but that growth slowed to about 6% last year, not enough to keep pace with demand.

So even one of the most stable sources of energy is now demonstrating price volatility.  While coal reserves are relatively plentiful, expanding the infrastructure to mine and transport is slow and expensive.

There is a silver lining, the China-driven coal boom has increased wages and created more jobs for U.S. miners and rail workers. This is a twist on recent trends moving industrial jobs from the U.S. to China.

These types of challenges make for difficult times for procurement professionals. Your ability to forecast and manage price volatility will make you a valuable member of your organization.