Why Tony? Is it the 5% slide in coking coal price this past month... http://www.sunsirs.com/uk/prodetail-978.html
Or some other reason?
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Why Tony? Is it the 5% slide in coking coal price this past month... http://www.sunsirs.com/uk/prodetail-978.html
Or some other reason?
No I'm still long this company, bought a mill of shares recently. They have a good internal position with thermal coal. With China's recent down turn in consumption and their removal of the 40% export tax Jan 2013 Met coal was always going to go south. I think that as their consumption increases along with India's and with the environmental buzz in the back ground then low sulphur coal for steel making is a long term play. I've been wrong before so time will tell. QUOTE=youngatheart;496560]Why Tony? Is it the 5% slide in coking coal price this past month... http://www.sunsirs.com/uk/prodetail-978.html
Or some other reason?[/QUOTE]
Sounds like there are some early signs that the world-wide coking coal mine closing starts to work:
http://online.wsj.com/articles/coal-...ize-1409517243
As well - Michael Warrington mentioned yesterday in his newsletter (http://www.chrislee.co.nz/market-news), that some 200 Indian coking coal mines might have some current legal trouble at hand impacting on their ability to supply.
Fits well together with other recent news that India is already suffering under the lack of (admittedly - cheap) coal:
http://www.themalaymailonline.com/mo...coal-shortages
Ah yes, and not to forget - Russia just invaded the heart of the Ukrainian coal country ... can't really imagine that war is a good way to boost production.
Edit (added later): http://www.mining.com/web/ukraines-n...omic-disaster/
Time to buy?
Discl: holding and just cancelled my sell order, but DYOR;
I topped up @ 5.2 NZ last week, hope they have bottomed out!
They say it is difficult to pick the bottom (well, unless with the benefit of hindsight), but somehow it has a bottom-ish feeling to it:
http://www.e-reful.com/news/383.html
Similar headline for Steelfirst (didn't bother to subscribe, probably referring to the same two shipments):
http://www.steelfirst.com/Scrap-and-...king-Coal.html
Discl: holding;
Have been watching this stock for awhile wondering if I should get in. My view was that the price is cheap at 5 cents or so.
But I have to admit I am losing any confidence there will be any reasonable gain in coking coal prices any time soon. Commodities have now hit a 5 year low and China look likely to accept lower growth. I can't see this demand being taken up elsewhere in the next year or 2, and certainly don't see a reasonable recovery in the coal price in the next 2 years.
My other big concern is BRL know how to burn cash. Not sure they have a survivable cost structure in this environment, and if their other mines come under pressure then we'll for sure see another capital raising. It's hard to compete with the big boys in Aussie and with the Aussie dollar depreciating considerably this year it's tough in NZ. it's hard to see any rebound in the Aussie dollar at the moment. But the kiwi on the other hand, although it has come down the last month is still very high. I don't expect any massive drop either. Especially next year when interest rates will continue there upward path keeping the kiwi right up there for the next couple of years. That combined with low coal prices just make this too risky at the moment, with very little scope for upside, IMHO.
I'll keep watching though.
Could be a story for 2016 if they can survive until then. But if thermal coal prices come under more pressure and cut their cashflow...well shareholders will have to dig in their pockets to keep the dream alive.
Hi Flugenbear - you are absolutely correct - this is a high risk share.
If the price for coking coal recovers over say the next 12 months, than the current share price is a steal. On the other hand - if it doesn't, than they will need more money (based on the IMHO quite optimistic price and currency assumptions they put into the recent annual report).
However not sure, whether you really need increased economic growth for the coal price to go up. Lots of mines have by now reduced or stopped production - just keeping the current consumption going is likely to increase the coking coal price over time (steady demand, reduced supply).
Discl: holding ... and reached my personal investment cap for this high risk stock (i.e. not buying more ..). DYOR and only risk money you can afford to loose!
Supply and demand....absolutely true.
No doubt the current coal price will put some out of business or force them to reduce...though I see some are even ramping up in Aussie (Cockatoo) can't really figure out why unless they are still profitable with these margins or they expect a bounce back in CP...or the Aussie $ to continue it's slide...who knows.
Only risk money you can afford to lose...very good advice.
I'm going to keep watching for now. I get the feeling there is a bit more pain to go yet unless the NZD takes a tumble. Though the SP can only go so much lower...it's near the bottom one way or another!
But yes, there certainly could be a pretty penny to be made on this one if it all comes together.
Happy to have picked up more of these at A$ 4c