Coal producers surged Thursday, putting the No. 4-ranked industry group ahead of all 197 IBD groups so far this week.

China-based coking coal producer Puda Coal (PUDA), Seattle-based L&L Energy (LLEN) (which has essentially all operations in China), and West Virginia-based ICG (ICO) rose sharply in active volume Thursday. All three stocks are in consolidations.

Group leader Walter Energy (WLT), a met coal producer based in Tampa, Fla., climbed 4% in average trade. The stock is extended after breaking out on Nov. 19 . Walter expanded its coking coal operations earlier this month, buying Vancouver-based Western Coal for $3.3 billion.

Alpha Natural Resources (ANR), the largest U.S. producer of metallurgical coal, climbed to a new 52-week high. The stock is up 27% from a 47.42 buy point. It broke out Nov. 8.

Demand from China has turned the coal market, particularly the metallurgical or coking coal market, increasingly global in the past several years. China produced 50.2 million metric tons in November, vs. 6.5 million tons in the U.S., according to the World Steel Association.

China's growth played a key role in boosting the WSA's 2010 global steel production forecast, released in October, to 1,272 million tons — topping the industry's 2007 record. The group forecasts 1,340 million tons for 2011.

Chinese demand has triggered a rebound in global met coal and iron ore prices. Steel makers in the U.S. and Europe find themselves increasingly squeezed between soft markets, weak pricing power and rising raw material costs.

Nancy Gravatt, spokesperson for the American Iron & Steel Association, says U.S. production is expected to remain below prerecession levels, but to increase about 10% in 2011, based on improving metrics in the auto and energy sectors."