Thinking about firing down here. Started a small position at $28.80. These coal companies are trading close to areas where the market is predicting a crash in the global demand for coal. Thats not going to happen. Coal companies are cutting production some wont survive but BTU will.
Would like to think that after the rout the past year (70+ to 26 now) that the worst was behind us and any improving fundamentals would begin to take us higher.......The ONLY real news that would be positive is the fact that many of the coal companies have become serious about reining in production. That will work its magic once demand firms up but it hasn't happened yet...Also the misery in the weaker players forecasts going forward and the regulatory overhang, competition from Natural Gas, European debt contagion, are ALL contributing to make this CRASH seem interminable. We're long past the point....and I'm kinda surprised that industry consolidation hasn't already kicked in. Especially for the likes of Patriot Coal and possibly Arch Coal......The assets have a value but no one is willing to buy them at this point......I'm sure the buyers are out there. I suspect that when COAL turns it will be decisive........or like Natural Gas that got under $2 quickly and then managed to get back to about $2.50 recently....without much fanfare......
I am waiting to buy (I estimate mid-summer) when the coal surplus is consumed, caused perhaps by a hot summer where everyone cranks up the AC forcing power plants to burn more coal to meet the demand.
I expect the Facebook debut will be a tide that lifts all boats today, distracting people away from Greece, dismal Europe, and the overall stagnant economy.
Come Monday or Tuesday, after the euphoria wears off and sharks start feeding on the new meat in the water (Facebook) the trend will continue its descent for a while.
Or maybe FB will spark a massive rally. I have completely given up trying to guess the future.
housing is the only other sector i can think of that has had a longer more severe run down than coal. a person might think people have to have housing. well they do but not 5 years inventory. at least the coal producers can shut down mines to control inventory.
>Just couldn't hold out any longer. <
I can, and I will.
Don't see a valid reason to buy a coal stock at this time with prices of oil and gas essentially in free fall due to better production technologies and diminishing world-wide demand for coal that is likely to continue for some while.
May come back if the price for BTU falls below 19 when it starts to become more competitive with the cheap oil/gas prices. But that's a real loose price break on my part that is likely to be influenced by carbon-energy cost changes in general across the world.
Don't see coal as a good buy at this time.