Coal Calls

Amongst the East Coast hysteria, the NYSE and NASDAQ closed for today and almost certainly will again on Tuesday.  My experience suggests speculators will become irritable (no action!) while investors get some work and analysis done without being distracted by moving prices.  Let’s look at some coal details from last week:

Peabody (BTU), of course, should be the ‘go to’ name in the coal space.  Unfortunately, its aggressive foray into Australia is now BTU’s ball and chain.  Last quarter BTU warned the poor Australian environment would hurt earnings and the stock was clobbered.  Results were better than the beat down expectations and the stock soared this quarter.  Meanwhile, “Peabody Energy called Friday for a national commission to tackle rising costs and government policy in Australia’s resources sector…”  WSJ.

Austrailia’s Whitehaven warned at the WSJ.

From Peabody’s conference call:

“…demand continues to be affected by sluggish U.S. GDP, along with a recession in Europe and deceleration of growth in China.”

“In metallurgical coal markets, our near-term outlook remains cautious, while the mid- to long-term view is positive.”

“Obviously, the PRB stockpiles on days burned are better off than the Illinois Basin, and both of those are significantly better off than Central App.”

 PBR coal, you say?  From CLD’s call:

“To sum up, we’re very pleased with our third-quarter performance and are encouraged by the outlook for the full year. Natural gas prices have risen to a level at which they do not displace much PRB coal and accordingly coal share of total electricity generation has risen from April’s lows. Improving shipments and good operation performance have allowed us to raise our adjusted EBITDA guidance slightly.”

From the ACI conference call:

“If we get a normalized winter, we think we could see those inventories come down pretty quickly and we think PRB would be the first respond. We’re assuming right now inventories by the end of year in that 180 million ton level. Assuming, again, normal winter weather, we would expect to see the PRB market improve.”

The debate to export PBR coal in the Pacific Northwest heats up:  Bellingham Herald.

Stock markets may be closed, but natural gas is higher by 2% (7 cents).  Oil is lower by over $1 and precious metals are a bit lower.  The resource heavy Toronto Stock Exchange is down a smidgen.