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Alliance Resource Partners LP Message Board

  • norris_3845 norris_3845 Feb 9, 2009 8:44 AM Flag

    The negative case

    Here is the negative case:

    1. The company has three consecutive disappointing quarters.

    2. The spot market price is dropping.

    3. We have significant political opposition to burning coal in the US. Is this a forward looking problem?

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    • 1. You are right about this
      2. Spot price is dropping but ARLP has long term contracts. They missed the huge run up last year but will benefit when new contract prices go into effect in 2009. Contract prices are still below current spot market price. ARLP did not gouge customers when spot price was up. Customers will return the favor and live by signed contracts in the future.
      3. There is political opposition but coal cannot be replaced in the foreseeable future. As the economy tanks natural gas peaker plants shut down, not baseloaded coal plants. Prospects look great for at least the next couple of years and longer.

      I actually have AHGP which benefits more as earnings grow.

      • 3 Replies to perham1
      • re the LT contracts. No buyer respects LT price commitments. They just buy elsewhere, for lower prices, wait for you to realize their volumes are low, and when you ask, they say something like...our volumes are lower than anticipated...and when you push, they say...we have to be competitive...

        EXM crashed this past week. Everyone was so sure their LT contracts for their ships were at a good price, till their biggest customer told them that they would only pay 50% of the contract price, take it or never talk to us again.

        LT contracts protect the buyer, sellers are always at risk.

        Coal is at the point, with iron ore, on the deflation/inflation story. I think that story will play out a lot in the next month. Watch the RIO negotiations with China for an indication.

        Just my guess, I don't have ARLP, but I do trade coal stox.

        Feddy

      • thank you for your response. It wasn't a rant or something stupid. I appreciated the civility.

        I have sold some of my ARLP and I have been writing tight covered calls (wrote covered calls at 17.5 on ahgp and 35 on arlp, they were tight when I wrote them, not so tight now) on both my ahgp and arlp. I also own several short ETFs (SKF and DXD). So, I am pretty defensive. I am trying to eak out a small gain, but I am not optimistic with Pelosi and Reid setting the agenda.

      • "3. We have significant political opposition to burning coal in the US. Is this a forward looking problem?"

        Higher taxes and fines.Well they will just pass those cost on to us,the consumers.

        http://www.youtube.com/watch?v=SMwBbl6RoIs

        Obama says he will bankrupt coal .

 
ARLP
44.77+0.08(+0.18%)Jul 11 3:59 PMEDT

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