BHP posts second straight year of record iron ore production, beats estimates
The world's largest listed miner said iron ore output from Western Australia on a 100% basis was 76.8 million tonnes in the three months to June 30.
Believing that the natural gas nightmare may be ending, investors are returning to coal.
Arch Coal (NYSE: ACI) jumped nearly 30% on Friday after reporting results that were better than Wall Street estimates.
Other coal miners who were caught in the up draft were Peabody Energy (NYSE:BTU), which is up 10.24% over the last three days to $20.99 a share, and Consol Energy (NYSE:CNX), which gained 5.85% to $29.49.
Energy companies have been switching to natural gas, which is currently half the price of coal. However, investors believe the low prices are unsustainable and the factors that were driving coal prices higher will resume.
“The coal investment thesis stands on two legs. First, U.S. coal producers will at some point no longer be held hostage to the natural gas oversupply. Secondly, the global super-cycle is being driven by the industrialization of China and other emerging nations,” writes Jeff B in Seeking Alpha.
On Friday Arch Coal reported a net loss of $436 million, or $2.05 per diluted share, in the second quarter of 2012.
To weather the sharp drop in demand for coal prices, Arch Coal has been shuttering high cost mining operations, like five thermal coal operations in Appalachia.
The company said business is looking up.
“We expect to see better balance in the second half of the year in the domestic thermal market given the ongoing rationalization of coal supply, increasing U.S. power demand, reduced coal-to-gas switching concerns and growing U.S. coal exports,” said John W. Eaves, Arch’s president and chief executive officer.
7 Comments
CLEMM
AFTER 40 YEARS SOUTH AFRICA WILL BE OUT OF COAL
Fannymaycartwright
My God, yesterday Coal was the obsolete fuel of the past; today “Coal is Back”! Whoever is editing these articles must be ADHD, or Chicken Little, or Caspar Milqtost. How about a little perspective, Nanny!
sidneyspit
I’d like to see the US and Canada switch gears on coal and begin using it to create diesel fuel. The latest techniques and technology can create super-clean burning diesel with the impurities removed — from coal. This way the coal market displaced by natural gas can be productively used and sold and emissions minimized. Better living through chemistry. Jobs saved.
Michael Allan McCrae
Coal will be fine in the long-term. Just wait for the natural gas glut to finish. It is good to see all this investment in natural gas in short-term for energy and transportation.
Claus Andrup
They won’t have far to go to school on this. Speak to SASOL in South Africa, the leading proponent of coal to diesel.
Brandon
Gas prices will go up and every body will see that coal is still the cheapest way to go.
Srfhtm
Natural gas will replace a huuuuge portion of coal used today in plants, trains, trucking company fleets, vehicles coming out etc etc. The oversupply of natural gas will be watched and patches will open up again according to NG pricing and keep a steady supply to allow the price to slooowly go up again just as coal “might be” now.
As this happens you should see a fifty fifty split down the road through coal and natural gad usage. At this time there should be a major switch to natural gases as well as renewables.
Interpretation of the rest should be easy.