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In 2011 Peter Epstein, CFA, left a $3 billion hedge fund where he was a senior natural resources analyst to help increase awareness of a number of natural resource companies in which he's invested in. PLEASE FOLLOW ME ON TWITTER: @peterepstein2 Mr. Epstein formed MockingJay, Inc., a... More
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  • Could The Coking Coal Market Get Any Worse?

     

    Could the Coking Coal Market Get Any Worse?
    Posted on October 1, 2014 by Peter Epstein

     

    Could the coking coal market get any worse? Probably not. A lot has been written about the plunge in iron ore prices, down about 41% this year alone due to oversupply from the Big 4, Vale S.A., (NYSE: VALE) Rio Tinto plc, (NYSE: RIO) BHP Billiton Limited (NYSE: BHP) and Fortescue Metals Group (ASX: FMG). The outlook for 2015 is for even more iron ore supply, despite China's growth rate slowing. A similar dynamic is taking place in coking coal, the coal used with iron ore to make steel.

    Coking coal prices have plunged 64% since 2011

    Like iron ore, coking coal prices have plunged. From mid-2011, the quarterly benchmark low-vol coking coal price collapsed from $330 per metric tonne to $119/tonne, a decline of 64%. BHP Billiton, through its BHP Billiton Mitsubishi Alliance, "BMA" Alliance and Teck Resources (NYSE: TCK) are the two largest players. Oversupply and elevated stockpiles throughout the supply chain are thought to be a dead weight on coking coal prices for at least the next several quarters. I agree. Inroads made by natural gas in recent years and ever increasing environmental scrutiny of the coal industry continue wreak havoc as well.

    - See more at: investorintel.com/market-commentary-inte...

    Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: ANR, WLT, ACI, RIO, TCK, BHP, coal, coking coal
    Oct 01 1:02 PM | Link | 3 Comments
  • Graphite Market Review: China's Exports To Decline Markedly

    Graphite Market Review - The graphite sector was down -3.59% for the week ending September 26th, 2014 based on the list of graphite stocks we are following listed below. China's intermediate-term supply crunch in graphite is not well appreciated by the market. This is surprising as 70% of the world's graphite comes from China, and exports will without question decline markedly in coming years. Even though it has been widely reported that there will be major curtailments of supply in two of China's major graphite mining provinces, graphite investors and end-users seem largely unfazed. China's actions have not yet been fully implemented, so the impact on supply may not be readily apparent. Even without this major catalyst, China also intends to keep more of its graphite for domestic uses. Make no mistake, this is a big deal. The moves by China have global implications.

    We've seen this movie before. A few years ago, China announced that it was closing down small, polluting and/or illegal coal mines. At first, this was largely ignored by the market. It was known that China was trying to clean up its act. It was also thought that China wanted to slash the large number of mining deaths due to unsafe work environments. As a result, China's imports of coal from Indonesia, Australia, Columbia, the U.S. and Canada started to increase, slowly at first, then by a more significant and consistent amount.

    - See more at: investorintel.com/graphite-graphene-inte...

    Disclosure: The author is long GPHOF, GLKIF, ABGPF.

    Sep 30 9:59 AM | Link | Comment!
  • Graphite Demand For EV's To Be Stronger Than Expected...

    Graphite Market Review - The graphite sector was down -5.37% for the week ending September 19, 2014 based on the list of graphite stocks we are following listed below. Graphite stocks were not immune from the overall selloff in natural resource stocks. The selloff is in part due to the significant weakness in gold and silver, and iron ore and coal prices at multi-year lows isn't helping investor sentiment either. The uranium spot price has risen 30% lately, but even that failed to move uranium stocks. China's growth rate is slowing, and its housing market is showing continued signs of weakening, causing fears that demand for many commodities will remain weak into next year.

    Graphite demand for 100% Electrical Vehicle, i.e. pure EVs will exceed expectations

    There's constant talk and articles written about the demand for graphite over the next decade with pundits pointing to Electric Vehicles (NYSE:EV) as a main driver. These commentaries invariably describe the $6 billion Tesla giga-factory with awe and fascination. I have alluded in the past to the fact that this single plant will merely be one of dozens, all needing copious amounts of high quality graphite. What evidence do I have of this? Caveat, I'm not a car person, but in reading a number of articles and speaking with experts it becomes apparent that Tesla is far from the only game in town.

    - See more at: investorintel.com/graphite-graphene-inte...

    Disclosure: The author is long GPHOF, ABGPF, GLKIF.

    Sep 23 11:20 AM | Link | Comment!
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