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Mon, Jan. 6, 5:48 PM
- Coal companies (KOL) have been closing mines and laying off workers, but coal isn't going away: Coal remains the biggest source of fuel for generating electricity in the U.S. even as production leaves Appalachia in favor of places such as Wyoming, and exports are growing fast.
- One reason coal won't disappear soon is that regulators are reluctant to let utilities become too dependent on natural gas, fearing that a sudden price jump could send electricity prices soaring; also, utilities have billions of dollars invested in plants that haven't been paid off.
- Overall, U.S. coal production is projected to remain relatively constant over the next three decades, according to the U.S. Energy Information Administration (EIA's quarterly coal report).
- Top coal names: BTU, ACI, ANR, CLD, CNX, JRCC, WLT.
Dec. 17, 2013, 3:24 PM
- Broadwind Energy (BWEN +14.4%) is set to be a major beneficiary of Siemens $1B-plus power contract with MidAmerican Energy, supplying the towers for the 448 wind turbines that will equip five wind power projects in Iowa.
- The move by Warren Buffett’s utility company shows how a drop in equipment costs is making renewable energy more competitive with power from fossil fuels - a boost for suppliers including BWEN, Siemens (SI), GE and Vestas (VWDRY, VWSYF), and a threat to coal miners (KOL).
- MidAmerican expects to close some coal-powered plants in 2015 as the price of wind power (FAN) continues to slide, an exec says.
Dec. 10, 2013, 6:50 PM
- Supreme Court justices today expressed sympathy for the EPA’s approach to air pollution that crosses state lines.
- The rule that would curb emissions from coal-fired power plants in 28 states - struck down by the D.C. Circuit Court of Appeals and being tested by power companies, states and miners - has never taken effect, but it would force companies to either shutter old plants or invest billions of dollars in pollution-control technology.
- The court’s four Democrat appointees, at times joined by Chief Justice Roberts and Justice Kennedy, suggested the EPA had adhered to the language of the Clean Air Act; only Justice Scalia seemed convinced the rule could be unfair to some states.
- ETFs: KOL, XLU, IDU, VPU, RYU, PUI, UPW, FXU, SDP, PSCU, FUTY, UTLT.
- Coal names: PCXCQ, BTU, WLT, CNX, ACI, ANR, JRCC, YZC, ARLP, AHGP, NRP, PVR, PVG, PVA, OXF, CLD, WLB, RNO.
Dec. 2, 2013, 3:52 PM
- The late-day rise in coal stocks (KOL) is attributed to comments by the EPA's Gina McCarthy that the agency would give states "significant flexibility" in meeting carbon emission requirements from power plants; the EPA will propose the standards next June, McCarthy says.
- Analysts say such flexibility would be especially positive for James River Coal (JRCC +9.7%), whose shares momentarily popped 25% before calming down a bit.
- Also: ACI +3%, ANR +1.4%, BTU +0.6%, WLT +1.3%, CNX +1.6%, CLD +0.8%, ARLP -0.2%.
Nov. 30, 2013, 8:25 AM
- Coal (KOL) has regained a little ground this year as the fuel of choice for U.S. power plants, but not in Appalachia, where natural gas for electricity generation has become very cheap.
- So much gas is being pumped from the Marcellus Shale, and so few pipelines serve the area, that a glut has developed in Pennsylvania and West Virginia, driving down the price of electricity and making it hard for coal to compete, WSJ reports.
- FirstEnergy (FE) stopped generating power in October at two plants in the area, and AES has told regulators it may close its Beaver Valley coal plant near Pittsburgh; analysts think more closures are likely in the region.
- As natural gas prices have crept up closer to $4/M BTUs, coal recovered some of its market share, but gas in Pennsylvania is going for as low as $1.83; the longer gas and electricity prices stay low, the more likely it is that commercial coal plant owners could shut plants or file for bankruptcy.
Nov. 26, 2013, 10:25 PM
- Arch Coal (ACI) is a "top sell" idea at Goldman given what analyst Neil Mehta calls "high leverage and near-peak valuations."
- Price target on ACI is $3. See also: Macquarie reiterates ACI at Neutral, raises target.
- Meanwhile, Goldman isn't as pessimistic about Alpha Natural Resources (ANR) and Walter Energy (WLT), which are both maintained at Neutral, although their price targets are cut to $8 (from $9) and $16 (from $18), respectively.
- Here's Mehta with more on the outlook for the sector: "We currently forecast benchmark met coal prices will improve from Q4 2013 levels of $152/MT to $160/MT, on average, in 2014. That said, we recognize downside risk to our Q1 2014 benchmark price of $160/MT given the recent pullback in spot pricing. Given only a gradual expected recovery in met coal prices, we favor cost-cutting, self-help leaders such as BTU or companies with restructuring potential such as SXC."
- Coal ETF - KOL
Nov. 21, 2013, 7:23 PM
- Al Gore praised Ontario Premier Kathleen Wynne in Toronto today after she announced legislation to ensure that once the last coal-fired plant closes next year it would be illegal to generate electricity by burning coal.
- But Ontario's electricity consumers are "getting burned," Tom Adams writes in the Financial Post; Ontario's power rates soon will surpass the highest of any state in the contiguous U.S., and the root cause of the "cancer" started with the coal phaseout that began a decade ago, he says.
- It's true that Ontario's carbon production has dropped dramatically, but closing the coal plants and going green had nothing to do with it, Terence Cook adds in another FP piece; he says the province reduced carbon emissions by rebuilding and refurbishing seven nuclear power plants.
- ETFs: KOL, NLR, NUCL.
Nov. 20, 2013, 6:50 PM
- Coal (KOL) may become the new tobacco if activist investors have their way; growing numbers of them, concerned about greenhouse gas emissions, are calling to divest holdings in companies that mine and burn coal.
- The U.K. today joined a U.S. commitment to minimize funding of foreign coal-fired power stations and says it will seek wider support for the pledge from other nations and development banks.
- What galls the activists: Global demand for coal is not in retreat. In 2011, coal was used to generate 30.3% of the world’s primary energy, the highest level since 1969, and the share slipped only to 29.9% last year.
- Like tobacco companies, coal producers may move to paying high dividends to attract investors amid an uncertain longer term future for the fuel.
- BTU, ACI, BHP, RIO, GLCNF, GLNCY, AAUKF, AAUKY, PCXCQ.
Nov. 15, 2013, 3:30 AM
- The Tennessee Valley Authority intends to shut eight coal-fired power stations in Alabama and Kentucky as part of a 2011 agreement with the Environmental Protection Agency to retire 18 such facilities by 2018.
- While expected, the TVA's move is a further blow to the coal industry as it struggles to cope with stricter environmental regulations and low natural-gas prices. The TVA is also reviewing some of its other coal facilities.
- Coal's loss is nuclear's gain, though, as the TVA's goal is to generate 40% of its electricity from nuclear power plants. (PR)
- Coal Tickers: CNX, BTU, CLF, ANR, WLT , ACI, JRCC.
- ETFs: URA, KOL
Oct. 17, 2013, 5:24 PM
- Short-oriented Bronte Capital's John Hempton sees Herbalife (HLF -0.1%) shares going still higher, possibly to $105/share, although he has reduced his stake. Of Ackman's missteps he says, "Before Ackman, we would never have been in Herbalife ... Ackman broke every rule of risk management. He came out there and said, 'We had this unbelievably strong short case against something, so we are 10% of our fund shorted and 25% of its float shorted and we did this in the most public way that you could imagine.'" Hempton made his bet against Ackman at $25-$26/share.
- On the short side, Hempton is particularly bearish on coal, and especially so on U.S. producers. He tethers his thesis on coal vs. natural gas price economics, which he believes outweigh any opportunity of demand increases from China as it transitions to cleaner seaborne coal.
- Coal ETF: KOL
- U.S. coal stocks: BTU, ANR, ACI, WLT, CLD, JRCC, CNX, RNO
Oct. 2, 2013, 11:59 AM
- Tohoku Electric Power reportedly will buy Australian thermal coal from Glencore Xstrata (GLCNF.PK) for delivery in the year from Oct. 2013 through Sept. 2014 at $85.80/metric ton, a big drop from their year-earlier contract price of $96.90/ton.
- The 11% price drop has wide significance for the coal market (KOL), as the two companies' term-pricing deals serve as a benchmark for other Japanese utilities, as well as for some Taiwanese and South Korean buyers.
Sep. 27, 2013, 4:19 PM
Sep. 27, 2013, 8:42 AM
- Goldman Sachs picks up coverage of the coal sector (KOL) with a Neutral rating, as it continues to face challenges including coal plant retirements, high net debt levels and commodity prices below historical averages, but some reasons for optimism, including the bottoming of met coal prices (Briefing.com).
- Among individual stocks, the firm upgrades Consol Energy (CNX) to Buy from Neutral, lifts Alpha Natural (ANR) and Walter Energy (WLT) to Neutral from Sell, downgrades Cloud Peak (CLD) to Neutral from Buy, and cuts Arch Coal (ACI) to Sell from Neutral.
- In its upgrade of CNX, Goldman cites improving cash flow from the coal segment, strong production growth from the E&P segment, potential for asset sales and restructuring, and a strong financial profile with industry-leading EBITDA growth and solid leverage metrics; CNX +1% premarket.
- In tagging ACI with a Sell rating, the firm cites one of the sector's highest leverage ratios, valuations near historical peak levels, a thermal outlook less bullish than consensus, and below-average earnings growth even if met coal prices recover above forecast; ACI -3.5% premarket.
Sep. 24, 2013, 6:25 PM
- First-generation carbon capture technology on a commercially viable scale likely will not be available until 2020, and will be expensive but not insurmountable, according to a panel at a Platts coal conference.
- Tom Sarkus, a director with the National Energy Technology Laboratory, foresees the technology raising the cost of electricity by 30%, based on an average of estimates produced by industry and scientific groups.
- Sarkus says the costs can be reduced as the technology is improved, but warns it will take years before such improvements make it to the market.
- The topic was given more weight in light of last week's EPA announcement (I, II) that new coal-fired power plants will need to limit carbon dioxide emissions to 1,100 lbs./mw-hour of power produced.
- ETFs: KOL, XLU, IDU, PUI, VPU, RYU, FXU, PSCU, UPW, SDP, UTLT.
Sep. 23, 2013, 2:59 PM
- As if coal companies (KOL) don't face enough problems in the U.S., China's once seemingly unlimited appetite for coal appears to be cooling.
- Economic growth in China is slowing, and rising public anger over air pollution is increasing pressure on utilities running the country's coal-burning power plants to shift to nuclear power and natural gas.
- Compounding the issue for U.S. miners is that China's own coal industry is improving; China sits on trillions of tons of coal reserves, so domestic mines should meet most of the country's demand for thermal coal as long as prices remain low and transportation costs affordable.
- There is already too much coal on the market, so China’s moves to cut down its “energy intensity” will hurt miners: ANR +0.8%, ACI -1.2%, WLT -0.1%, BTU +0.5%, CLD -0.6%, JRCC -1.4%, CNX -0.7%, RNO -1.2%.
Sep. 21, 2013, 8:25 AM
- Both critics and supporters of the new EPA draft regulations on CO2 emissions agree on one thing: This will be the final blow to many proposed coal plants.
- The truth is, U.S. coal generation already was in decline not because of climate regulations, but because of good ol' free-market capitalism; the boom in natural gas production has dramatically increased supplies, sent prices plummeting and prompted a shift away from coal.
- Among potential long-term winners: U.S. nat gas drillers such as CHK and XOM, drilling services firms such as HAL and BHI, pipeline companies such as SE and KMI, makers of gas-fired turbines such as GE and SI, power generators such as NRG and CPN if electricity prices rise.
- Likely losers: Coal appears headed for a decline, and companies with large Appalachian operations such as JRCC and ANR could suffer most as more coal comes from cheaper-to-access deposits in the Illinois Basin and Wyoming; big industrial companies, which have used low U.S. power prices as a competitive advantage, are concerned.
- ETFs: KOL, IDU, PUI, XLU, VPU, RYU, FXU, PSCU, UPW, SDP, UTLT.
KOL vs. ETF Alternatives
The Market Vectors® Coal ETF (KOL) seeks to replicate, before fees and expenses, the price and yield performance of the Market Vectors Global Coal Index (MVKOLTR), a rules-based, modified-capitalization-weighted, float-adjusted index intended to give investors exposure to the overall performance of the largest and most liquid companies in the global coal industry.
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