Huge Coal Correction in progress
July 02, 2008
– Comments (8)
Those who are long... relax... this is a temporary correction in a long-term supply/demand driven bull market for coal. Those who were not yet long.... this is your 4th of July present from Wall Street.
NEW YORK, July 2 (Reuters) - Stocks in coal mining companies tumbled on Wednesday after both physical and swaps prices fell in what traders said was a long-awaited correction.
Analysts noted the benchmark European price dropped from around $225 per tonne to below $200, which in turn dragged down U.S. prices.
The Dow Jones coal index was down 10.1 percent in New York at Wednesday midday.
"The U.S. guys have been signing contracts at very good numbers, well into the triple digits, but the stocks don't reflect that," said Jeremy Sussman, a coal industry analyst with Natixis Bleichroeder.
"We are telling people now is a good time to buy."
In London at least one physical coal cargo has traded almost $20 lower than prices indicated on Tuesday and bids have pulled back by over $20 from Tuesday's levels for South African cargoes FOB Richards Bay and multi-origin coal delivered into Europe.
Australian coal FOB Newcastle reached $201 a tonne earlier in the week and Newcastle swaps hit similar numbers. Newcastle swaps on Wednesday began trading at $192, $185, $183 and $177.
Richards Bay cargoes traded close to $180 early in the week but bids had pulled back to $150 by Wednesday afternoon.
NEW YORK, July 2 (Reuters) - Stocks in coal mining companies tumbled on Wednesday after both physical and swaps prices fell in what traders said was a long-awaited correction.
Analysts noted the benchmark European price dropped from around $225 per tonne to below $200, which in turn dragged down U.S. prices.
The Dow Jones coal index was down 10.1 percent in New York at Wednesday midday.
"The U.S. guys have been signing contracts at very good numbers, well into the triple digits, but the stocks don't reflect that," said Jeremy Sussman, a coal industry analyst with Natixis Bleichroeder.
"We are telling people now is a good time to buy."
In London at least one physical coal cargo has traded almost $20 lower than prices indicated on Tuesday and bids have pulled back by over $20 from Tuesday's levels for South African cargoes FOB Richards Bay and multi-origin coal delivered into Europe.
Australian coal FOB Newcastle reached $201 a tonne earlier in the week and Newcastle swaps hit similar numbers. Newcastle swaps on Wednesday began trading at $192, $185, $183 and $177.
Richards Bay cargoes traded close to $180 early in the week but bids had pulled back to $150 by Wednesday afternoon.
Miners were the top losers in London, with BHP Billiton falling 4.4 percent, Rio Tinto 4.39 percent and Anglo American lost 4.3 percent.
In midday trading on the New York Stock Exchange, Arch Coal was down 12.81 percent at $65.50, Consol Energy dropped 10.8 percent to $99.86, Massey Energy fell 11.82 percent to $81.43 and Peabody Energy was down 7.06 percent at $79.83. (Reporting by Steve James in New York; additional reporting by Jackie Cowhig in London)
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