The India Coal Story Gets More Intriguing
I’ve talked a lot about coal in India lately.
The way things are setting up, I believe the story could be one of the biggest surprises of the coming year. And data today makes me even more convinced.
Shipping numbers reported today show that India imported 12.73 million tonnes of steam coal in June. That’s a big number–one of the highest monthly totals on record.
It also brings India’s three-month total imports for April to June to over 36 million tonnes of thermal coal. To put that number into perspective, remember that India imported a total 88.8 million tonnes of thermal in the fiscal year ended March 31, 2013.
During the three months to June, India has thus brought in over 40% of the import volume it saw for the entire year previous.
That’s very significant. The global thermal coal market is extremely depressed right now. Prices have fallen as growing production from Indonesia and Australia has raised fears of a supply glut.
But no one is pricing in the ravenous import growth from India. If we annualize the numbers for the last three months, the nation is on pace to import nearly 145 million tonnes of thermal coal this fiscal year. That would be a staggering 60% increase from the previous year.
Even if imports come in below this level, there’s a good chance India will absorb all of the excess production in the Pacific. And possibly then some.
This could result in unexpected momentum for prices and profits of coal producers. Especially if it’s accompanied by high-cost operations in places like Australia shutting down (which seems to be happening).
This is going to take a lot of people off-guard. Be watchful and ready.
Here’s to the new kid in the game,
http://piercepoints.com/?p=317
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Coal 02 (Jul 12 - Dec 25)
Re: Coal 02 (Jul 12 - Dec 13)
by winston » Sat Aug 10, 2013 8:01 am
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Re: Coal 02 (Jul 12 - Dec 13)
by winston » Tue Aug 20, 2013 6:35 am
Ups and downs of lower coal price by Eunice Leung
Yanzhou Coal Mining (1171) fell into the red, incurring an interim net loss of 2.07 billion yuan (HK$2.62 billion), while first-half net profit at China Resources Power (0836) soared 77.6 percent to HK$5.3 billion from a year earlier.
As coal prices kept falling, Yancoal Australia, a subsidiary of Yanzhou, made 2.099 billion yuan provision for asset impairment. Sales income of Yanzhou fell 10.8 percent to 25.24 billion yuan from a year back.
Benefiting from lower coal prices, CR Power proposed an interim dividend of 8 HK cents, compared to 6 HK cents last year.
Earnings per share hit HK$1.12. Turnover rose 4.5 percent to HK$32 billion in the first half of this year, while fuel costs decreased by 15.8 percent.
CR Power president Wang Yu-jun said costs in the second half would continue to drop, predicting the full-year expenditure would fall 12 to 14 percent.
Wang said the electricity tariff might decline following the slide in coal prices.
But tariffs are unlikely to fall significantly as the government is keen to encourage the use of more environmentally friendly power, which is usually more expensive than coal-generated electricity.
CR Power has slashed its full-year coal production target from 20 million tonnes to 15 million tonnes as there is excess supply in the market.
As for the scandal involving the firm buying three Shaanxi coal mines, Wang said the National Audit Office is now evaluating the political responsibility of China Resources chairman Song Lin on the matter.
Wang said one of the mines will start trial production in October and full production next year while another two will start trials next year.
http://www.thestandard.com.hk/news_deta ... 30820&fc=2
Yanzhou Coal Mining (1171) fell into the red, incurring an interim net loss of 2.07 billion yuan (HK$2.62 billion), while first-half net profit at China Resources Power (0836) soared 77.6 percent to HK$5.3 billion from a year earlier.
As coal prices kept falling, Yancoal Australia, a subsidiary of Yanzhou, made 2.099 billion yuan provision for asset impairment. Sales income of Yanzhou fell 10.8 percent to 25.24 billion yuan from a year back.
Benefiting from lower coal prices, CR Power proposed an interim dividend of 8 HK cents, compared to 6 HK cents last year.
Earnings per share hit HK$1.12. Turnover rose 4.5 percent to HK$32 billion in the first half of this year, while fuel costs decreased by 15.8 percent.
CR Power president Wang Yu-jun said costs in the second half would continue to drop, predicting the full-year expenditure would fall 12 to 14 percent.
Wang said the electricity tariff might decline following the slide in coal prices.
But tariffs are unlikely to fall significantly as the government is keen to encourage the use of more environmentally friendly power, which is usually more expensive than coal-generated electricity.
CR Power has slashed its full-year coal production target from 20 million tonnes to 15 million tonnes as there is excess supply in the market.
As for the scandal involving the firm buying three Shaanxi coal mines, Wang said the National Audit Office is now evaluating the political responsibility of China Resources chairman Song Lin on the matter.
Wang said one of the mines will start trial production in October and full production next year while another two will start trials next year.
http://www.thestandard.com.hk/news_deta ... 30820&fc=2
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Re: Coal 02 (Jul 12 - Dec 13)
by winston » Sat Sep 07, 2013 8:22 am
The Entire Chinese Coal Industry is Bust
At least for the time being.
Platts reports data this week showing that the current Chinese price for thermal coal (as reflected in the FOB Qinhuangdao 5500 NAR marker) is below the cost of production for more than 90% of domestic miners.
That’s a huge revelation for the global thermal coal market. No one in China is making money at current prices.
There hasn’t yet been much word on coal mines closing in the country. But that would be the next logical step under current circumstances.
The chart below (with data from China Data Online) shows that Chinese coal producer profits (black line) dropped dramatically in the first half of 2013.
The data show that the drop in profits is partly a result of declining prices (red bars). But more due to a pervasive problem for the global mining sector: rising costs (blue bars).
It would appear that today’s thermal coal prices are simply too low for the current economic environment. That should provide an upward push to pricing sooner or later.
http://piercepoints.com/?p=397
At least for the time being.
Platts reports data this week showing that the current Chinese price for thermal coal (as reflected in the FOB Qinhuangdao 5500 NAR marker) is below the cost of production for more than 90% of domestic miners.
That’s a huge revelation for the global thermal coal market. No one in China is making money at current prices.
There hasn’t yet been much word on coal mines closing in the country. But that would be the next logical step under current circumstances.
The chart below (with data from China Data Online) shows that Chinese coal producer profits (black line) dropped dramatically in the first half of 2013.
The data show that the drop in profits is partly a result of declining prices (red bars). But more due to a pervasive problem for the global mining sector: rising costs (blue bars).
It would appear that today’s thermal coal prices are simply too low for the current economic environment. That should provide an upward push to pricing sooner or later.
http://piercepoints.com/?p=397
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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Re: Coal 02 (Jul 12 - Dec 13)
by winston » Thu Sep 19, 2013 8:09 pm
Action
Re-iterate MARKET WEIGHT; BUY Shenhua and China Coal; upgrade Yanzhou Coal to HOLD.
Although thermal coal prices are still weakening as of now, we think they are bottoming out with signs of stabilisation. Downside to share prices is also limited in our view, as the market has priced in the weak coal price outlook. Positive catalyst would be coal prices stabilising and recovering.
We value the three coal stocks on DCF (previously on PE multiple) to better reflect their operational fundamentals. Based on SOTP and DCF valuations, maintain BUY on Shenhua and raise our target price from HK$35.00 to HK$38.30, implying 12x 2014F PE vs mean PE of 13x.
Maintain BUY on China Coal and reduce target price from HK$8.55 to HK$6.32, implying 13x 2014F PE vs mean PE of 17x. Upgrade Yanzhou
Coal to HOLD with a target price of HK$8.57 (from HK$7.80), implying 0.7x 2014F P/B. Entry price is HK$7.5
Source: UOBKH
Re-iterate MARKET WEIGHT; BUY Shenhua and China Coal; upgrade Yanzhou Coal to HOLD.
Although thermal coal prices are still weakening as of now, we think they are bottoming out with signs of stabilisation. Downside to share prices is also limited in our view, as the market has priced in the weak coal price outlook. Positive catalyst would be coal prices stabilising and recovering.
We value the three coal stocks on DCF (previously on PE multiple) to better reflect their operational fundamentals. Based on SOTP and DCF valuations, maintain BUY on Shenhua and raise our target price from HK$35.00 to HK$38.30, implying 12x 2014F PE vs mean PE of 13x.
Maintain BUY on China Coal and reduce target price from HK$8.55 to HK$6.32, implying 13x 2014F PE vs mean PE of 17x. Upgrade Yanzhou
Coal to HOLD with a target price of HK$8.57 (from HK$7.80), implying 0.7x 2014F P/B. Entry price is HK$7.5
Source: UOBKH
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Re: Coal 02 (Jul 12 - Dec 13)
by winston » Tue Oct 22, 2013 6:05 am
A Huge "Bad to Less Bad" Trade Is Shaping Up Here By Matt Badiali
You might not believe it, but things are starting to get less bad for coal stocks right now…
Coal is probably the most hated fuel in the U.S. today… It's dirty and old-fashioned. Combine this with the cheap abundance of natural gas, and U.S. coal demand has collapsed over the past few years.
You see, natural gas is a direct competitor with coal as a fuel for electric power. And natural gas prices fell over 85% to below $2 per thousand cubic feet – spurring a massive switch from coal to natural gas… Demand for natural gas soared 38% from 2008 to 2012.
Despite this, coal is still a critical piece of the U.S. energy supply. And there's a big "bad to less bad" trade here…
In 2012, the U.S. produced over a billion tons of coal. Coal-burning power plants consumed 81% of that supply. There are 1,400 coal-fired power producing stations around the U.S., which produced 37% of the electric power supply in 2012.
However, that's down from 48% in 2008.
As U.S. demand for coal dried up, the price collapsed from $118 per ton (for eastern U.S. coal) in 2008 to $60 per ton today. A few producers, like Patriot Coal and America West, went bankrupt. Others, like James River Coal and Xinergy, are on the brink. Even miners that are solvent are closing mines to stay that way. Alliance Resource Partners recently shut down its Pontiki coal mine in Kentucky.
As you would imagine, this fall in demand and price crushed coal stocks. Shares of major coal miner Peabody Energy (BTU) are down over 79% from their 2011 highs.
But as my friend and colleague Steve Sjuggerud says, when things get bad, they only need to get "less bad" for investors to make a lot of money.
And that's exactly what appears to be happening in coal stocks…
In the first seven months of 2012, the U.S. used 464 million tons of coal. That rose 7% to 497 million tons over the same period in 2013. The uptick in coal use came thanks to rising natural gas prices, which have doubled from their April 2012 lows.
Demand from abroad is strengthening, too. The U.S. exports coal to Europe and Asia, where demand is climbing. In fact, the U.S. hit a monthly record amount of coal exported in March 2013. Coal miners sent 13.6 million tons of coal overseas. That's nearly 1 million tons over the previous record, set in June 2012. The top destinations for U.S. coal exports were China, the Netherlands, U.K., South Korea, and Brazil.
Given that many coal stocks are beaten-down… and sentiment toward this sector is absolutely terrible… just a slight uptick in demand will send these stocks much higher. A "bad to less bad" trade is setting up right now. Don't miss it.
Source: S&A Resource Report
You might not believe it, but things are starting to get less bad for coal stocks right now…
Coal is probably the most hated fuel in the U.S. today… It's dirty and old-fashioned. Combine this with the cheap abundance of natural gas, and U.S. coal demand has collapsed over the past few years.
You see, natural gas is a direct competitor with coal as a fuel for electric power. And natural gas prices fell over 85% to below $2 per thousand cubic feet – spurring a massive switch from coal to natural gas… Demand for natural gas soared 38% from 2008 to 2012.
Despite this, coal is still a critical piece of the U.S. energy supply. And there's a big "bad to less bad" trade here…
In 2012, the U.S. produced over a billion tons of coal. Coal-burning power plants consumed 81% of that supply. There are 1,400 coal-fired power producing stations around the U.S., which produced 37% of the electric power supply in 2012.
However, that's down from 48% in 2008.
As U.S. demand for coal dried up, the price collapsed from $118 per ton (for eastern U.S. coal) in 2008 to $60 per ton today. A few producers, like Patriot Coal and America West, went bankrupt. Others, like James River Coal and Xinergy, are on the brink. Even miners that are solvent are closing mines to stay that way. Alliance Resource Partners recently shut down its Pontiki coal mine in Kentucky.
As you would imagine, this fall in demand and price crushed coal stocks. Shares of major coal miner Peabody Energy (BTU) are down over 79% from their 2011 highs.
But as my friend and colleague Steve Sjuggerud says, when things get bad, they only need to get "less bad" for investors to make a lot of money.
And that's exactly what appears to be happening in coal stocks…
In the first seven months of 2012, the U.S. used 464 million tons of coal. That rose 7% to 497 million tons over the same period in 2013. The uptick in coal use came thanks to rising natural gas prices, which have doubled from their April 2012 lows.
Demand from abroad is strengthening, too. The U.S. exports coal to Europe and Asia, where demand is climbing. In fact, the U.S. hit a monthly record amount of coal exported in March 2013. Coal miners sent 13.6 million tons of coal overseas. That's nearly 1 million tons over the previous record, set in June 2012. The top destinations for U.S. coal exports were China, the Netherlands, U.K., South Korea, and Brazil.
Given that many coal stocks are beaten-down… and sentiment toward this sector is absolutely terrible… just a slight uptick in demand will send these stocks much higher. A "bad to less bad" trade is setting up right now. Don't miss it.
Source: S&A Resource Report
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Re: Coal 02 (Jul 12 - Dec 13)
by winston » Thu Dec 05, 2013 5:35 pm
My Top Commodity Trade Today By Matt Badiali
Wednesday, December 4, 2013
It's the kind of trade most folks would tell you you're crazy to make…
Over the past couple months, I've shown you how a bet on coal could easily return 100% or more over the next 12-24 months.
We have that opportunity because the sentiment toward coal is terrible…
Abundant natural gas supplies in the U.S. have pushed natural gas prices down. Since natural gas competes with coal as an energy source, coal prices have fallen, too. Plus, folks are worried that U.S. politicians will put coal-fired power plants out of business.
As I explained, that sets up a situation where you can buy coal producers at absurdly low prices and profit if things get a little "less bad" for coal here in the U.S.
And there's one more thing you need to know: The coal story is a global story. And the global story is bullish.
Let me explain…
As with many commodities, coal's supply/demand dynamics are greatly shaped by China…
Below is a table of the world's largest coal producers.
World Rank Country Est. 2012 Production
(Million metric tons)
1 China 3,549
2 United States 935
3 India 595
4 Indonesia 443
5 Australia 421
6 Russia 354
7 South Africa 259
8 Germany 197
9 Poland 144
10 Kazakhstan 126
Data from the International Energy Agency
China is not only the world's largest coal producer. It is also the world's largest consumer. The country needs vast amounts of cheap power to continue growing. And coal is its fuel of choice. It gets 80% of its electricity from coal.
According to the International Energy Agency (IEA), the top five consuming countries accounted for nearly 75% of the world's coal consumption. China consumed more than twice as much coal as the next three largest consumers combined.
Here's the breakdown:
World Rank Country Est. 2012 Consumption (Million metric tons)
1 China 3,678
2 United States 822
3 India 753
4 Russia 251
5 Germany 241
6 South Africa 187
7 Japan 184
8 Poland 140
9 Australia 137
10 South Korea 127
Data from the International Energy Agency
Although China produces an enormous volume of coal, the cost is high. Its coalmines are small, dirty, and dangerous. To address that problem, China is shutting down many of them… In 2012, it shut down nearly two per day.
Going forward, the government will not permit any new mines with production of less than 300,000 metric tons per year. It will only focus on mines that produce large amounts of coal. Only projects so big that they "move the needle" on China's coal supply will be permitted.
Those mine closures, as well as rising demand in China, mean it will need more imports. And China isn't alone.
Global demand for coal power will grow by 434 gigawatts through 2020, according to energy publication Bloomberg New Energy Finance. That's 41% higher than the current capacity.
While some older coal-powered stations will shut down, the newer coal-burning power plants will add about 1.1 billion tons of new demand per year to supply the fuel.
According to an Energy Information Administration forecast, the conservative estimate of coal-demand growth is about 1.3% per year through 2040. However, respected commodity research firm Wood Mackenzie forecasts a 25% rise over the next six years.
William Durbin, Wood Mackenzie's president of global markets, told an audience at the World Energy Congress, "China's demand for coal will almost single-handedly propel the growth of coal as the dominant global fuel… Unlike alternatives, it is plentiful and available."
In short, the broad, global demand picture is positive for coal. Coal producers are cheap. And folks can't stand the thought of owning them.
It's time to buy.
Source: www.growthstockwire.com
Wednesday, December 4, 2013
It's the kind of trade most folks would tell you you're crazy to make…
Over the past couple months, I've shown you how a bet on coal could easily return 100% or more over the next 12-24 months.
We have that opportunity because the sentiment toward coal is terrible…
Abundant natural gas supplies in the U.S. have pushed natural gas prices down. Since natural gas competes with coal as an energy source, coal prices have fallen, too. Plus, folks are worried that U.S. politicians will put coal-fired power plants out of business.
As I explained, that sets up a situation where you can buy coal producers at absurdly low prices and profit if things get a little "less bad" for coal here in the U.S.
And there's one more thing you need to know: The coal story is a global story. And the global story is bullish.
Let me explain…
As with many commodities, coal's supply/demand dynamics are greatly shaped by China…
Below is a table of the world's largest coal producers.
World Rank Country Est. 2012 Production
(Million metric tons)
1 China 3,549
2 United States 935
3 India 595
4 Indonesia 443
5 Australia 421
6 Russia 354
7 South Africa 259
8 Germany 197
9 Poland 144
10 Kazakhstan 126
Data from the International Energy Agency
China is not only the world's largest coal producer. It is also the world's largest consumer. The country needs vast amounts of cheap power to continue growing. And coal is its fuel of choice. It gets 80% of its electricity from coal.
According to the International Energy Agency (IEA), the top five consuming countries accounted for nearly 75% of the world's coal consumption. China consumed more than twice as much coal as the next three largest consumers combined.
Here's the breakdown:
World Rank Country Est. 2012 Consumption (Million metric tons)
1 China 3,678
2 United States 822
3 India 753
4 Russia 251
5 Germany 241
6 South Africa 187
7 Japan 184
8 Poland 140
9 Australia 137
10 South Korea 127
Data from the International Energy Agency
Although China produces an enormous volume of coal, the cost is high. Its coalmines are small, dirty, and dangerous. To address that problem, China is shutting down many of them… In 2012, it shut down nearly two per day.
Going forward, the government will not permit any new mines with production of less than 300,000 metric tons per year. It will only focus on mines that produce large amounts of coal. Only projects so big that they "move the needle" on China's coal supply will be permitted.
Those mine closures, as well as rising demand in China, mean it will need more imports. And China isn't alone.
Global demand for coal power will grow by 434 gigawatts through 2020, according to energy publication Bloomberg New Energy Finance. That's 41% higher than the current capacity.
While some older coal-powered stations will shut down, the newer coal-burning power plants will add about 1.1 billion tons of new demand per year to supply the fuel.
According to an Energy Information Administration forecast, the conservative estimate of coal-demand growth is about 1.3% per year through 2040. However, respected commodity research firm Wood Mackenzie forecasts a 25% rise over the next six years.
William Durbin, Wood Mackenzie's president of global markets, told an audience at the World Energy Congress, "China's demand for coal will almost single-handedly propel the growth of coal as the dominant global fuel… Unlike alternatives, it is plentiful and available."
In short, the broad, global demand picture is positive for coal. Coal producers are cheap. And folks can't stand the thought of owning them.
It's time to buy.
Source: www.growthstockwire.com
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Re: Coal 02 (Jul 12 - Dec 13)
by winston » Thu Jan 02, 2014 8:14 pm
Uptrend for Chinese coal prices is ending
China's coal prices surged 2.7% weekly last week, according to the data from the Ministry of Commerce.
The coal prices have surged cumulatively by 16.8% in past 10 weeks due to the strong demand in thermal power and heat supply sector.
Moreover, the uptrend for Chinese coal prices, which are led by large size coal companies, is close to the end as the negotiation between coal and power companies has already reached advanced stage.
Source: AAStocks Financial News
China's coal prices surged 2.7% weekly last week, according to the data from the Ministry of Commerce.
The coal prices have surged cumulatively by 16.8% in past 10 weeks due to the strong demand in thermal power and heat supply sector.
Moreover, the uptrend for Chinese coal prices, which are led by large size coal companies, is close to the end as the negotiation between coal and power companies has already reached advanced stage.
Source: AAStocks Financial News
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Re: Coal 02 (Jul 12 - Dec 14)
by winston » Tue Jan 07, 2014 6:29 am
Falling Chinese domestic thermal coal prices pose risk for imports
Singapore (Platts)--6Jan2014
Chinese domestic thermal coal prices have fallen further, fuelling speculation that some power utilities might be looking to walk away from existing contracts for imported material, sources said Monday.
"I have heard rumours maybe that some power plants in China are renegotiating or defaulting on some shipments. But that is just a rumour," a Singapore-based source said.
"If I had sold February arrivals [cargoes of 5,500 kcal/kg NAR imported coal] above $84/mt, I would be slightly panicking as I think the Chinese expect levels to get back down to about $79-80/mt CFR south China or maybe lower," he added.
http://www.platts.com/latest-news/coal/ ... s-26594785
Singapore (Platts)--6Jan2014
Chinese domestic thermal coal prices have fallen further, fuelling speculation that some power utilities might be looking to walk away from existing contracts for imported material, sources said Monday.
"I have heard rumours maybe that some power plants in China are renegotiating or defaulting on some shipments. But that is just a rumour," a Singapore-based source said.
"If I had sold February arrivals [cargoes of 5,500 kcal/kg NAR imported coal] above $84/mt, I would be slightly panicking as I think the Chinese expect levels to get back down to about $79-80/mt CFR south China or maybe lower," he added.
http://www.platts.com/latest-news/coal/ ... s-26594785
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Re: Coal 02 (Jul 12 - Dec 14)
by winston » Tue Feb 11, 2014 6:19 am
Coal producers are stuck in a downtrend… sector fund KOL is sitting just off a new four-year low.
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Re: Coal 02 (Jul 12 - Dec 14)
by behappyalways » Wed Feb 12, 2014 1:44 pm
春节刚过，中国最大的输煤港口秦皇岛港煤炭库存已经突破800万吨警戒线，值得注意的是，这一数字还在继续攀升，2月9日升至828万吨，2月10日涨至841万吨，再创新高，种种迹象表明港口煤炭严重滞销，煤炭供应过剩的压力将继续对动力煤价格造成压制
http://jingji.cntv.cn/cjfocus/shouye/msfy/index.shtml
http://jingji.cntv.cn/cjfocus/shouye/msfy/index.shtml
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