Outstanding coal analysis re-post by Gregor.
Fundamental to reviving the depressed coal sector is a natural gas price recovery. The natty rig count has collapsed and production started to look weak, but then I see Value’s commentary at Investor Village. Natural gas, the gasbags and especially some of the coal guys spiked on this morning’s inventory data (Reuters). Our hot weather is addressing the storage overhang; but the natty supply over-production is really what needs to be watched.
Coal and natty power generation dynamics from AOL Energy.
ACI chart: Greg Harmon
Rail traffic is strong, even with weak coal loadings. I’d like to find out how much is Bakken oil. Value Plays.
Many U.S. coal producers have cut capex to delay the timing of projects. Low investment meeting higher demand would mean high returns:
“…global coal demand was expected to increase, driven by longer-term, increasing electricity generation within the Asia Pacific region. “China’s coal imports are accelerating in recent months, and we project they will reach a record 285-million tons in 2012 as the country increasingly looks to the seaborne coal markets,” he said. Global metallurgical coal use was forecast to jump 25% by 2016, mostly driven by China and India, adding another 250-million tons of demand growth.” Mining Weekly
“We are optimistic that the June 6th dismissal of Barrick Gold’s CEO and the $70 billion aggregate net debts of Glencore, BHP Billiton and Vale discourage cap ex.” John Tumazos
“…little credit is given to the fact that China’s growth over the past 30 years has lifted more people out of poverty than in any period in history.” China Daily. Average Chinese salaries: China Daily.
China auto exports to other emerging nations booms: NY Times
“In the past, Western companies invested in Asia to take advantage of low labor costs to export goods back to home. Increasingly, they are investing in the region to sell products locally.” WSJ
I know zilch about aluminum, but I do listen to price: Platts
Teck rumor: AMP 2012