Coal 02 (Jul 12 - Dec 25)

[winston]

Mainland thermal coal price drops for 9 weeks; down about 15% in over 2 months

Bohai Rim thermal coal price index continues moving down and the thermal coal market remains weak.

The latest Bohai Rim thermal coal price index fell by RMB10/ton from the last reporting period to RMB538.

It has been sliding for nine weeks from the peak of RMB631/ton on 25 December 2013, with a decline of 14.74%, Shanghai Securities News reported.


Source: AAStocks Financial News

[winston]

THE BOTTOM IS LIKELY IN FOR COAL STOCKS

Despite all the bad press, the sellers just can't knock coal stocks down any more...

Coal is the fuel that powers over 35% of U.S. power plants. It provides over 65% of China's electricity.

However, tightened environmental regulations have depressed earnings in the coal-mining sector. Plus, coal often competes with natural gas. Surging natural gas production has depressed gas prices... which have depressed coal prices.

All that produced a giant decline in the Dow Jones U.S. Coal Index. As you can see from the chart below, the index fell from its early 2011 level of 496 to its 2013 low of 101... a fall of 80%. It's one of the biggest sector wipeouts of the last decade.

Although the press is still terrible for coal, the sellers haven't been able to punch through the old 2013 low. Still, as this recent Wired cover story highlights, there's plenty of demand for the stuff. After an 80% decline, it's likely the bottom is in for this extremely out of favor sector.

Source: Daily Wealth

[winston]

Coal sector fund KOL hits a three-month high… still down 62% over the past three years.

[winston]

China mapping out plan to control total coal consumption - NDRC expert
2014-04-10

China is now mapping out a plan to control total coal consumption, hinting the proportion of coal in the energy source portfolio will decrease, while that of clean energy will increase, an energy expert from the National Development and Reform Commission said at an international coal conference in China.

Source: AAStocks Financial News

[winston]

An Energy Speculation That Could Make You a Fortune By Brian Weepie

Is anyone making money in coal right now?

The answer could help contrarian speculators make a fortune over the next few years…

Coal is probably the most hated fuel in the U.S. today… It's dirty and old-fashioned. Many folks are worried U.S. politicians will put coal-fired power plants out of business. And abundant natural gas supplies have pushed coal demand down over the past few years.

You see, natural gas is a direct competitor with coal as a fuel for electric power. And natural gas is cheap at less than $5 per thousand cubic feet today. This has spurred a massive switch from coal to natural gas. As demand for coal dropped, so did its price. The price collapsed from $118 per ton (for eastern U.S. coal) in 2008 to around $60 per ton today.

Lower demand and prices have been tough for coal producers. Many are exiting the business.

Consol Energy recently sold five of its coal mines. It will now focus on natural gas exploration and production.

Meanwhile, James River Coal, Patriot Coal, Trinity Coal, and America West Resources have all filed for bankruptcy.

But this is exactly what contrarian speculators like to see.

You see, natural resources like coal are tremendously cyclical. That means their prices move in waves. They go through big booms and busts. The best time to invest in natural resources is when everyone hates them.

After the market leaves a natural resource for dead, things often get better. Production drops to meet lowered demand. Eventually, demand picks up… causing prices to boom.

And contrary to what most folks think, coal isn't going out of style. As my colleague Matt Badiali showed you earlier this year, the world is still consuming huge amounts of the stuff.

That's why I like owning the beaten-down coal sector. But you have to be careful. If you buy companies that can't stop bleeding cash, you'll lose. If you buy companies that can still produce profits while prices are low, you can wait out the bad times and make big money.

So which coal companies are still making money?

To answer this, I searched for U.S. coal companies that are growing cash flow. The companies in the table below increased cash flow from operations last year. This is cash left over after paying normal operating expenses. They also earned enough cash to pay capital expenditures, or "cap-ex" (funds used to buy or upgrade assets like property, buildings, or equipment), dividends, and interest:

Company
Mkt Cap Cash from Ops Cap-Ex, Div, and Int Paid Positive Cash Flow
Alliance Resource Partners $3.1B $704.7M ($558.4M) $146.3M
Cloud Peak Energy $1.3B $180.7M ($155.8M) $24.9M
Westmoreland Coal $443.5M $80.7M ($66.3M) $14.4M
Source: Capital IQ

Of these, Alliance and Westmoreland also generated higher EBITDA (earnings before interest, taxes, depreciation, and amortization) in 2013 than the year before.

I recommend digging deeper into these companies if you're looking to invest in coal today.

They have the cash flow to weather the storm. And they may be big beneficiaries of the next boom in coal.

Source: S&A Resource Report

[winston]

Beaten-down coal stocks are trying to break out of a long downtrend… coal producer fund KOL surges to a three-month high.

[winston]

New Chinese law could mean huge changes for one commodity

This key event is really happening...

At least, it appears. The much-touted Chinese coal import ban.

News last week out of China suggests this elusive regulation is close to becoming reality. With the government perhaps having already enacted the legislation.

What we know is that the Chinese parliament has approved a new set of environmental laws. The first such rule change in over two decades in the country.

That's been officially announced. What we don't know yet is the exact content of the new rules. But sources told market analysts Platts that new rules on coal shipments into China are a "centerpiece" of the environmental reforms.

That could be one of the biggest developments for the international coal market in years. Perhaps creating a permanent shift in global trading patterns – and setting up some significant opportunities.

Here's how. According to Platts' sources in China, the government will now prohibit imports of lower-quality coal. Specifically, supplies with a calorific value of less than 3,900 kcal/kg.

That affects imports from exactly one place on the planet: Indonesia. Which is currently a major supplier of low-calorie coal to buyers globally-including China.

That means Chinese consumers may now no longer be able to source Indonesian imports. Which endangers a great deal of supply. In 2013, China imported nearly 60 million tonnes of low-quality coal.

If the new rules go ahead as reported, that coal will now have to come from somewhere else. Likely Australia--which is the closest supplier to China of higher-quality coal that would pass the import ban.

Miners here could thus see an upsurge in demand. Even coal producers in the U.S. could benefit. At least those that have capacity to ship significant supply to Asian markets.

We'll see if the reports from China turn out to be true. If so, watch for a reorganization of coal markets soon.


Source: Pierce Points

[winston]

"Bad to less bad" rally drives coal-producer fund KOL to a new four-month high.

[winston]

Seven surprising facts about one of the world’s most important commodities

By Marin Katusa

Source: Casey Research

http://thecrux.com/seven-surprising-fac ... mmodities/

[behappyalways]

“We are sure that by 2016 – or at the latest 2017 – the levellised cost of solar PV will be the same as coal-fired generation. It is going to completely transform the energy market in China,” he said.



Solar to match coal in China by 2016, threatening fossil dominance
http://blogs.telegraph.co.uk/finance/am ... dominance/