Waiting for Coal

“The number one reason people get out of the game is because they have suffered a portfolio loss that exceeds what they can live with. The number 2 reason people get out of the game is because they can’t stand the volatility (ups and downs) and uncertainty during a crisis.”  See It Market

I would like to urge a patience with coal.  I know the Internet is populated coal bulls who see marvelous opportunity in the small sector.  Depressed valuations meet the industrialization of the third world.  I am all over it.  But slow down.  China needs to regain momentum for the emerging market story.  Met coal could be rolling over.  And U.S. natural gas production needs to decline meaningfully, of which there has been no sign.

Natural gas well completions are headed in the right direction (OGJ).  Yet still more time is needed.  Gas production has been held up by associated production (Me at SA), but Natural gas liquids hit dry patch as prices sink (Fuel Fix) is a good thing.  Bakken natural gas production figures to be big (Dickinson Press).

How’s that Natural Gas Rally Coming Along?  All Star Charts

If the children of my dear friends in the Philippines are to enjoy a better life, then this chart is accurate:  API.

The long term super-cycle side of the coal meme continues to take a beating with current conditions.  “China’s power generation sector consumed 916.89 million mt of coal over January-June, up 1.5% year on year, a report by Beijing-based Dexin Yongming Consultation showed Friday.”  Platts

Arch Coal (ACI) reported second quarter results and held their conference call this morning.  The financial leverage stands out:  First half interest expense was $150.5 million against EBITDA of $361 million.  Whow!  But their next maturity is not until 2016.  ACI is higher by 19%, back to Tuesday’s price level.