PRB coal is still not rising ... I am losing patience
Recent two weeks and next two weeks are going to be hotter that average. You would expect PRB prices should start rising ...
I am not surprised with CAPP situation given NG price, inventories in CAPP utilities, recent overproduction, but when it comes to PRB, NG is not a competitor for something like 90% of PRB at the current prices, inventories are very low now ... what's going on?
ACI & BTU said that the utilities are going to wait till September (to see what was summer burn) before start shopping. Well ... it is September. I would expect by now 2014 and 2015 futures should have risen. I do not see that happening!
Front-month contracts are slowly going up. Last year this time PRB was 9.40 (increased from 8.50 in July, 2012) Now, next month contracts are something around 10.50 ... pathetic! Even more pathetic considering that in May they jumped above $11 for about a week.
The sad part is that in 10 days or so, we will be at the lowest inventories for the year and chances are they are go up (seasonally). Much easier to negotiate prices at the lowest inventories ....
Piggy,ACI seems to be making higher lows recently..Since you can now write calls in .50 increments, you might take a look at writing front month covered calls...BTW,like the "piggy" moniker! :-) Regards,HOG
Wow!!! That takes cajones especially at these depressed prices. Good luck. so far so good. If you can buy ACI back at lower price you will make out on both ends.
I used to do that something like that with ANR last year. When ANR ran up I would sell and buy back at a lower price but I never had the balls to short ANR. Shorted Massey (MEE) once at 18 and it quickly went to 60.
Anyway, good luck. Coal stocks are volatile. possibility of a lot gain or a lot of pain.
Over time I expect coal stocks to do better. Met coal prices are firming up, the global economy may start recovering, NG prices may go up and thermal coal prices may improve as coal stockpiles decline. Who knows.
You would think there would be a more sophisticated collaborative effort between all the large coal producers to choke off supply if the price wasn't increasing. Too much supply = stagnant or lower pricing. All large producers have enough cash to idle plants for six months and work off inventory. Then we'll see how much the end user will pay when their stockpiles are down to nothing.