1. China growth is probably about half of what is officially stated 2. Chinese domestic thermal coal production growth will probably satisfy coal demand growth 3. Imported thermal coal demand and price will hold at best with no growth for the next couple of years
I say this because the electricity sector in China has also been unusually weak. The official Xinhua news agency reported quarterly electricity consumption grew 4.3%, citing the National Energy Administration. In the corresponding quarter of 2012, electricity use rose 6.8% as GDP reportedly grew 8.1%. This year's slowdown appears pronounced, covering production and extraction of resources, with its quarterly electricity use rising just 0.3%. Total electricty use also stagnated as the quarter progressed. Electricity consumption edged up 2% in March. Electricity use grew at a 5.5% rate last year.
Some analysts like me often look to electricity consumption as a more reliable indicator of economic activity in China where official GDP figures have been subject to doubt. The electricity consumption in China is not centrally controlled and much harder to manipulate the collective totals. China's official GDP data has come into question twice in recent weeks with reports that the General Administration of Customs overstated exports for several months due to widespread tax rebate fraud. The National Bureau of Statistics report of first quarter GDP then fell short of analysts forecasts but the electricity and coal figures now suggest that growth may have been even lower than NBS estimates.
Peabody's Q1 Results And Coal Outlook [View article]
CMI, Asian demand could well drive revenue for Peabody, however you are missing the elephant in the room.
While the AUD is persistently high, there is just no margin in the coal being moved. So while the revenues maybe there, the margins are not. More importantly will not until the AUD falls, or prices go up by 25%.
So...why is the AUD so high. Function of currency wars, Australian banks still giving 4.5% on term deposit, and been perceived as a safe currency haven while USD, YEN and EUR devalue.
As strange as it sounds, BTU profitability largely hinges on the AUD.
Dissecting The Upgrade Of Peabody Energy [View article]
It is all called voter collateral damage. Cheap shots on the coal industry does not loose too many votes. Definitely compared to telling Moms and Dads they can't burn wood.
Burning wood is almost in the US constitution, along with owning guns and instructing the world how to live.
Dissecting The Upgrade Of Peabody Energy [View article]
Thanks VZ for your insight. However I fear that any peer review with BTU is somewhat irrelevant when they are experiencing different headwinds to the others. Eg: Exposure to high AUD, high strip ratio pits in Australia, pressure to contribute to Tolgoi. List goes on not to mention the Patriot pension and avoidance of royalties. (Which Arch is party to)
I think you will find the current BTU dividend representing the true value. On that basis, the BTU share price should be around $15 for a descent return compared to peers.
Peabody Energy: Bottomed Out, Upgraded And Ready To Recover [View article]
I suspect this is the Super Cycle Greg Boyce told us about. Super 'Down' Cycle. Which would lead to the concept of a turn around at some point. Christmas maybe...you just need to pick the year :)
Peabody Energy: Bottomed Out, Upgraded And Ready To Recover [View article]
What a load of nonsense. Chuck is spot on.At BTU own admission 50% of profits come from Australia. With the coal prices and AUD where it is, there will be next to no profits.I suggest you take the current dividend and extrapolate to say 3-4% yield means the BTU share price real value is around $10.If the AUD was 80c, then the current share price makes some sence,HCC at $200, and Thermal at $140 with a 80c AUD, now thats what it will take for the share price to be $30.I have a friend who works for BTU in Brisbane, and she was suprised how big her annual bonus was. Interesting, no value for shareholders from this house in the near term.
Peabody Energy: I Am Bullish On This Coal Stock [View article]
I use the term "screaming baby" as a description of the unhappy staff. Despite the board agreeing, nobody at MCC say happy about the take over of what we considered as very successful company.
I attended a meeting with Greg and Eric post take over. They made it very clear their reason for acquisition was securing the tenement portfolio which would enable them to stay in Australia.
My comment about Reserves was only of those in Australia.
Is It Time To Get Fired Up About Peabody Energy? [View article]
Think and Win,
Thank you for your article. However it missed the biggest issue facing BTU today.
Profitability for BTU is heavily linked to a margin from it's Australian operations. While the AUD sits above parity, there will be no margin to speak of. If the AUD falls below parity, down to say 90 cents, then profits and dividends rocket and so will the share price.
Why is the AUD so high? - It is seen as a safe place to park cash and earn at least a respectable interest rate. (4.0 - 4.7%)
What would make it fall? - Fall in official Australian interest rates, currency traders bailing in anticipation of a change in Govt.
The reality is, if you hold BTU stocks, you will need to get interested in the Australian economic scene. BTU is not USA centric anymore.
T1243 is an Asian Coal Industry analyst, available if you need help.
Lights Out At Big Game Offers Compelling Demonstration To Counter Those Who Envision World Without Coal [View article]
"Conspiracy theory" Probably. My comment was more about the lack of social grace of even comment.
The light went out in New Orleans. It will take them several weeks to find the truth, let alone decide what they will say about it.
I lived in New Orleans for a short while, and the local politics are something else. The only thing I could be sure about is not knowing the full truth.
The Future Of Coal [View article]
1. China growth is probably about half of what is officially stated
2. Chinese domestic thermal coal production growth will probably satisfy coal demand growth
3. Imported thermal coal demand and price will hold at best with no growth for the next couple of years
I say this because the electricity sector in China has also been unusually weak. The official Xinhua news agency reported quarterly electricity consumption grew 4.3%, citing the National Energy Administration. In the corresponding quarter of 2012, electricity use rose 6.8% as GDP reportedly grew 8.1%. This year's slowdown appears pronounced, covering production and extraction of resources, with its quarterly electricity use rising just 0.3%. Total electricty use also stagnated as the quarter progressed. Electricity consumption edged up 2% in March. Electricity use grew at a 5.5% rate last year.
Some analysts like me often look to electricity consumption as a more reliable indicator of economic activity in China where official GDP figures have been subject to doubt. The electricity consumption in China is not centrally controlled and much harder to manipulate the collective totals. China's official GDP data has come into question twice in recent weeks with reports that the General Administration of Customs overstated exports for several months due to widespread tax rebate fraud. The National Bureau of Statistics report of first quarter GDP then fell short of analysts forecasts but the electricity and coal figures now suggest that growth may have been even lower than NBS estimates.
Peabody's Q1 Results And Coal Outlook [View article]
Peabody's Q1 Results And Coal Outlook [View article]
While the AUD is persistently high, there is just no margin in the coal being moved. So while the revenues maybe there, the margins are not. More importantly will not until the AUD falls, or prices go up by 25%.
So...why is the AUD so high. Function of currency wars, Australian banks still giving 4.5% on term deposit, and been perceived as a safe currency haven while USD, YEN and EUR devalue.
As strange as it sounds, BTU profitability largely hinges on the AUD.
Dissecting The Upgrade Of Peabody Energy [View article]
Dissecting The Upgrade Of Peabody Energy [View article]
Burning wood is almost in the US constitution, along with owning guns and instructing the world how to live.
Dissecting The Upgrade Of Peabody Energy [View article]
However I fear that any peer review with BTU is somewhat irrelevant when they are experiencing different headwinds to the others. Eg: Exposure to high AUD, high strip ratio pits in Australia, pressure to contribute to Tolgoi. List goes on not to mention the Patriot pension and avoidance of royalties. (Which Arch is party to)
I think you will find the current BTU dividend representing the true value. On that basis, the BTU share price should be around $15 for a descent return compared to peers.
Peabody Energy: Bottomed Out, Upgraded And Ready To Recover [View article]
Peabody Energy: Bottomed Out, Upgraded And Ready To Recover [View article]
Peabody Energy: Bottomed Out, Upgraded And Ready To Recover [View article]
Peabody Energy: Bottomed Out, Upgraded And Ready To Recover [View article]
Peabody Energy: I Am Bullish On This Coal Stock [View article]
Peabody Energy: I Am Bullish On This Coal Stock [View article]
I attended a meeting with Greg and Eric post take over. They made it very clear their reason for acquisition was securing the tenement portfolio which would enable them to stay in Australia.
My comment about Reserves was only of those in Australia.
Peabody Energy: I Am Bullish On This Coal Stock [View article]
I can reassure you that BTU did not have 9 billion tons located in Australia and they would have potentially run out of coal by 2024.
I can also reassure you that MCC was not failing. They had one of the largest coal tenement portfolios which BTU needed to stay in Australia.
Finally...these are not points of view.
Is It Time To Get Fired Up About Peabody Energy? [View article]
Thank you for your article. However it missed the biggest issue facing BTU today.
Profitability for BTU is heavily linked to a margin from it's Australian operations. While the AUD sits above parity, there will be no margin to speak of. If the AUD falls below parity, down to say 90 cents, then profits and dividends rocket and so will the share price.
Why is the AUD so high? - It is seen as a safe place to park cash and earn at least a respectable interest rate. (4.0 - 4.7%)
What would make it fall? - Fall in official Australian interest rates, currency traders bailing in anticipation of a change in Govt.
The reality is, if you hold BTU stocks, you will need to get interested in the Australian economic scene. BTU is not USA centric anymore.
T1243 is an Asian Coal Industry analyst, available if you need help.
Lights Out At Big Game Offers Compelling Demonstration To Counter Those Who Envision World Without Coal [View article]
The light went out in New Orleans. It will take them several weeks to find the truth, let alone decide what they will say about it.
I lived in New Orleans for a short while, and the local politics are something else. The only thing I could be sure about is not knowing the full truth.