• 5 minutes Trump will capitulate on the trade war
  • 7 minutes China 2019 - Orwell was 35 years out
  • 12 minutes Glory to Hong Kong
  • 15 minutes ABC of Brexit, economy wise, where to find sites, links to articles ?
  • 3 hours Is Eating Meat Worse Than Burning Oil?
  • 41 mins Diplomatic immunity
  • 2 mins China & Coal: China's 2019 coal imports set to rise more than 10%: analysts
  • 7 hours Canada Election Deadlock?
  • 1 hour ‘If it saves a life’: Power cut to 1.5 million Californians
  • 8 hours Wonders of US Shale: US Shale Benefits: The U.S. leads global petroleum and natural gas production with record growth in 2018
  • 23 hours Devaluing the Yuan
  • 12 hours Russia Predicts The Death Of U.S. Shale
  • 16 hours Nigeria Demands $62B from Oil Majors
  • 8 hours AOC vs Wells Fargo CEO on Dakota Access
  • 1 day Fareed Zakaria: Canary in the Coal Mine (U.S. Dollar Hegemony)
  • 12 hours IMO 2020:
  • 16 hours The Ultimate Heresy: Technology Can't Fix What's Broken
Alt Text

What The Market Is Overlooking In The Occidental Deal

Occidental Petroleum has caught a…

Alt Text

How To Play A Recovery In Oil Prices?

A realistic correction in the…

Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

More Info

Premium Content

Here Are The First Market Reactions in Coal

It's no secret the coal market is depressed.

Prices for thermal coal have fallen 50% from their five-year highs. Stock valuations for producers have tumbled--some by as much as 90%.

The question for investors then is: when will it get better?

There have been some swirling undercurrents in that regard. Rumors of production cuts in major producer Indonesia, for example.

But this month we got some of the first substantial news on a potential turnaround. Showing how supply and demand has finally started shifting in the sector.

Particularly in Australia. Where major coal producer BHP Billiton suggested it will cut production from one of its biggest mines.

The firm said it has terminated development work at its Goonyella Riverside mine in Queensland. Canceling contracts for stripping work aimed at expanding output here.

The work stoppage here could have a meaningful effect on supply--given that Goonyella is one of BHP's biggest mines. Producing 12.4 million tonnes for the fiscal year ended June 30, 2013.

The company noted that any output cuts resulting from the move will "be reported in quarterly production reports."

At the same time, reports from the shipping industry show a similar story. With less coal now being sold on international markets.

Platts reports that Panamax-sized coal vessels are shutting down. With low coal prices simply making such shipments unprofitable.

As one trader put it, "Owners are starting to think it's below cost and are anchoring."

Another source observed the effect this might have on the market. Saying that the industry is "looking to find a floor as for some owners we are already at levels below their running costs."

It would thus appear we've reached a point where few players in this market are making profits. And supply is responding accordingly. Historically, that hasn't been a bad time to buy.

Here's to the bottom,

By Dave Forest




Download The Free Oilprice App Today

Back to homepage



Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play