Coal 02 (Jul 12 - Dec 25)

[winston]

not vested

DJ MARKET TALK: China Coking Coal Stocks Priced In Gloomy Scenario - CS

1255 [Dow Jones] Credit Suisse initiates coverage on China coking coal sector; the house says despite stagnant steel demand in China, it believes coking coal market will remain mostly balanced in 2012-13 before a potential surplus emerges.

"The coking coal stocks have already factored in the gloomy scenario, and a potentially firmer-than-expected pricing for domestic hard coking coal may surprise the market on the upside."

CS prefers hard coking coal producers with low cost under the current stagnant demand; the house likes Shougang Fushan (0639.HK) for its attractive valuation and high dividend yield; it starts the stock at Outperform with a target price of HK$3.40. Fushan shares rise 5.1% to HK$2.07 at midday.

Source: Dow Joness Newswire

[winston]

Not vested

China Coal Producers fell after Michael Parker, a Hong Kong-based analyst at Sanford C. Bernstein, said prices of the fuel haven’t reached a bottom.

“There are, or will shortly be, hundreds of millions of tons of idled coal production capacity in China right now,” he wrote in an emailed research note today.


Source: Bloomberg

[winston]

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DJ MARKET TALK: Coal Prices Recovering, China Coal Preferred - Barclays

0806 [Dow Jones] Barclays says the big fundamental pricing and inventory dislocations, that led to the extraordinary fall in thermal coal prices in 2Q12 are being worked out, noting Qinhuangdao inventories are now close to eight million tons after peaking at 9.4 million tons six weeks ago, while IPP coal inventories are now at 23 days of burn, vs a peak of 28 days, and well on the way to their average level of around 16-17 days.

"The production cuts in response to lower coal prices have taken hold and an undershoot in supply could lead to a material rally in (coal) prices."

The house tips China Coal Energy (1898.HK) as its preferred exposure, as it "provides the right balance between leverage and safety in the current coal price environment."

It keeps the stock at Overweight with an unchanged target price of HK$10.10. China Coal softened 0.7% to HK$7.31 Thursday after rallying 6.5% in the previous two sessions.

Source: Dow Jones Newswire

[winston]

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DJ MARKET TALK: Coal Stocks Rally; But Sell Into Strength - UBS

1111 [Dow Jones] Coal stocks continue to reverse their big underperformance vs IPPs in most of 2012, with high-beta Yanzhou Coal Mining (1171.HK) rising 3.6% to HK$13.74 on top of its 9.6% rally across Friday and Tuesday.

The outperformance by coal stocks was underpinned by expectations that coal prices are bottoming, while investors also switched out of defensive IPPs amid the risk-on rally.

IPP leader Huaneng Power (0902.HK) rebounds 1.4% to HK$5.15 after falling 9.6% in the previous three sessions.

Still, UBS says "we disagree with the market, as we do not expect any meaningful rebound in coal prices in the absence of demand recovery and material production cuts."

It advises investors to sell coal names and is still positive on Chinese IPPs on a six-month view. China Coal (1898.HK) is up 2.2% at HK$7.91.


Source: Dow Jones Newswire

[winston]

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DJ MARKET TALK: Sell China Coal Stocks After Handsome Run - Nomura

0827 [Dow Jones] Nomura says China coal stocks have had a "handsome run" in recent days, on speculation that domestic coal prices may have bottomed; it believes it's logical to see coal prices stabilize due to peak summer demand, but "we believe (coal prices) should not rebound sharply due to weak demand and excess inventory."

With share prices already up by about 20% from recent troughs, "we would advise investors to take profit or sell on strength."

Nomura reiterates its bearish sector view, and says China Shenhua (1088.HK) is the only preferred pick during an industry down cycle given its resilient earnings profile on the back of its low production cost, sufficient reserves and coal/power/railway asset portfolio.

Yanzhou Coal (1171.HK) fell 1.0% to HK$13.32 Thursday, as profit-taking set in following the stock's 11.2% rally over the previous four sessions.


Source: Dow Jones Newswire

[winston]

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DJ MARKET TALK: China Coal Stocks Lack Positive Catalyst - MS

0817 [Dow Jones] Morgan Stanley says its analysis suggests it will take at least four months to lower current coal inventories in China to 18 days.

As such, Chinese spot coal prices are likely to remain sluggish, and its forecast is for 2H12 spot coal price to average CNY650/ton, down 23% on-year.

"The (coal stocks) group thus lacks a positive price catalyst," MS says and believes Yanzhou Coal Mining (1171.HK) remains most vulnerable to weak spot coal prices.

In the IPP space, the house believes current valuation already factors in weak coal prices, but not weak power demand.


Source: Dow Jones Newswire

[winston]

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DJ China's 2H 2012 Coal Demand To Stay Slow -Industry Official

BEIJING--China's demand for coal in the second half of the year will slow because of weak industrial sectors and an overall slowing domestic economy, an industry official said Tuesday.

Speaking at an industry conference, Dong Yueying, secretary general of the China Coal Transport and Distribution Association, said coal demand from industrial sectors such as steel, power and construction will continue to slow.

China's power consumption is expected to grow just 6.8% in the second half, while crude steel output will grow by 2% in the same period compared with year-earlier levels, Mr. Dong said.

China's coal demand growth for the full year will either be unchanged or only slightly higher on year because of the slowing Chinese economy, he added.

Due to an oversupply in the global market and relatively cheap international prices, China's net coal imports are expected to still rise in the second half of the year.

The country is expected to import 250 million metric tons of coal in 2012, Mr. Dong said, adding that growth in imports will likely come from Colombia, South Africa and Mongolia.

China's coal output and consumption fell for the first time this year in July because of oversupply in the domestic market, Mr. Dong said.

China produced 310 million tons of coal in July, down 1% on year, and consumed just 295 million tons, down 2.7%, according to the industry association.

In the January to July period, China produced 2.25 billion tons, up 5.5% on year, while consuming just 2.15 billion tons, up 4.9%, according to the association.

China's Bohai-Rim Steam-Coal Price Index, which tracks four types of coal at six ports, rose 0.2% to 627 yuan a ton in the week to Aug. 28 after prices bottomed out earlier this month.


Source: Dow Jones & Company, Inc.

[winston]

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DJ MARKET TALK: China Coal Prices To Recover In 4Q12 - UOBKH

0919 [Dow Jones] UOB KayHian expects China coal prices to recover in 4Q12, with restocking demand supporting a recovery.

The house keeps its Market Weight stance on the coal sector with China Shenhua (1088.HK) its top Buy; it notes that in the past three months, Shenhua's share price has outperformed peers, showing that playing defensive worked.

"Going forward, if coal prices rise faster than our expectation, then we can take on more risk."

Between China Coal (1898.HK) and Yanzhou Coal (1171.HK), the house prefers China Coal for its domestic exposure, strong balance sheet and earnings sustainability.


Source: Dow Jones & Company, Inc.

[winston]

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China to suspend control over coal price - NDRC

Wall Street Journal reported Zhou Fengqi, senior adviser of the Energy Research Institute at NDRC, said the Chinese government is about to suspend the control over the coal price.

The coal producers and power generation companies will sign a contract of at least five years to annually negotiate over the price. The government will not be responsible for the pricing of coal, but will continue to monitor the market to avoid price volatility.

Zhou pointed out that the lower coal prices at present create a good environment for the reform.

The coal price is very low, so the relationship between suppliers and power generation companies is not tense. Recently, the average price of domestic coal was reduced from RMB800 per ton to RMB600.


Source: AAStocks Financial News

[winston]

Coal price in CN down RMB200 in Aug - NDRC

National Development and Reform Commission released an August summary on the situation of China's coal industry.

Coal demand in Mainland China continued to fall, and so did volumes of coal production and sales.

Coal handled by major ports declined 10.4% to 50.49 million tons while coal imports dipped 0.7% to 20.44 million tons.

As at 31 August, steal coal price at Qinhuangdao port fell around RMB200/ton year-on-year to RMB625 - RMB635 per ton.


Source: AAStocks Financial News