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Energy / Coal

  • This Struggling Commodity Is Still Booming In One Part Of The World

    As I discussed last week, the commentary around the global coal business has been doom and gloom lately. But few investors recognize that the market is booming in one part of the world: India. Local statistics released this week show that the Indian coal story is still very much going strong. With the current year yielding double-digit growth in demand. Reuters interviewed India's Coal Secretary Anil Swarup on Tuesday. With the Secretary noting that India's coal imports are likely to come in at 200 million tons for the fiscal year ended March 31.Related: Oil Markets Blow Yemen Crisis Out Of Proportion…

  • Weak Chinese Demand Could Undermine Entire Coal Market

    China imported coal at the slowest rate in almost four years, sending coal markets into a tailspin. For the month of February, China imported 5.86 million metric tons of thermal coal, a 46-month low, and a nearly 50 percent decline year-on-year. The dip may have seen a bit of an artificial dip as China’s Lunar New Year resulted in slower industrial activity. Part of the problem is illegal coal production in China. The central government last year propped up struggling producers, but that has led to a supply glut as inefficient producers continue to mine coal. Now the government is…

  • The World's Most Uniquely-Positioned Coal Play

    Things are starting to get interesting in the global coal market.The key word being "starting".The strategy unveiled by South Africa's power authority Eskom may be a game changer. In that it could divert a significant amount of supply from the export market into the domestic power space.Now, to be sure, the worldwide thermal coal market is in the doldrums. And it's unlikely that even a significant shift in South Africa is going to be the silver bullet to get prices moving higher again.At least not everywhere.But the thing is, when it comes to coal, there are markets within markets. And…

  • A “Wave of Bankruptcies” About To Hit Coal Industry

    The future for the coal industry is looking “increasingly bleak,” according to an investor’s note from Macquarie Research. The analysis firm also said that “a wave of bankruptcies” appear to be just over the horizon as coal mining companies deal with mounting debt and a shrinking market. The coal markets have collapsed in spectacular fashion over the last few years due to a perfect storm of factors. U.S. coal producers first had to compete ferociously with shale gas in America’s electric power sector as fracking took off about a decade ago. That forced an array of coal plants to shut…

  • Surprising Opportunities In Coal

    Long term subscribers and those with a long memory may remember that back in August of last year I wrote a piece on coal stocks. At the time I described them as too risky for investors and suggested only one trade, shorting Westmorland Coal (WLB) which, at the time looked seriously overvalued. That trade worked out well as WLB fell from there, dropping around 40 percent until bottoming out earlier this month. That wasn’t the only coal stock to fall in that time. They pretty much all did, but now the risk/reward ratio has shifted enough to make investing in…

  • Clock Runs Out On Clean Coal

    Clean coal is dead. While the notion of coal being a source of “clean” was a bit oxymoronic to begin with, the Obama administration perhaps put an end to the dream for good. The so-called FutureGen 2.0 project was an ambitious – some might say quixotic – attempt by the Bush administration to demonstrate the viability of coal in an era of greenhouse gas reductions. The $1.7 billion project hoped to overhaul a 65-year-old coal-fired power plant in Illinois with carbon capture technology. After carbon sequestration was demonstrated, the government-backed project would help develop a new industry of low-carbon coal…

  • Will 2015 See A Rally In Coal?

    2014 was, on the surface, a good year for those of an environmentally conscious bent. Under pressure from developed nations, two large emerging economies, India and China, both made some commitment to a reduction of greenhouse gasses and laid out plans to increase the use of renewable energy sources. That, combined with falling oil prices, put enormous pressure on the coal industry, already burdened with increased regulation in the world’s major economies. That drop in oil and coal prices, however, may set up a year that will see significant gains in coal in 2015. It is, of course, hard, if…

  • Germany Considers Coal Phase Out

    Amid a major phase out of nuclear power, Germany is weighing whether or not to undertake another monumental energy transition – shutting down a significant portion of its coal-fired power plant fleet. In 2011, Germany decided to shut down its nuclear reactors within a decade, a bold response in the aftermath of the Fukushima meltdown. The so-called energiewende – or energy transition – is an audacious plan to rapidly switch from large baseload nuclear power to renewable energy, primarily from solar and wind. A second energy transition is being considered in Berlin. The German government is negotiating with utilities to…

  • Utilities Facing Coal Shortages Due To Rail Congestion

    With winter approaching, the piles of coal at utility yards are running well below average, and several utilities are pressuring rail companies to allow more coal trains through. The problem is the traffic jam on railways across the country. A bumper crop for U.S. grain has led to a surge in shipments, with farmers shipping 15% more grain so far in 2014 compared to a year earlier. The story is similar with oil. Shipments of oil by rail – owing to a dearth of pipeline capacity – are up more than 13% this year. But coal still makes up the…

  • The Unwelcome Reality For U.S. Coal Exports

    U.S. coal export capacity is running well below capacity, and as such, exporting coal from the U.S. west coast is a losing strategy. That comes from a new report put out by the Institute for Energy Economics and Financial Analysis (IEEFA), which found that despite the very lofty plans by many coal companies to ship coal to rapidly growing markets in Asia, doing so would result in a financial loss. The report finds that even existing coal export terminals are not running full tilt. The U.S. exports coal largely through ports on the east coast – at Hampton Roads, VA,…