schminkie

Back to the Future - Commodities Rule Again

yep. pretty odd maybe? till i see even a tiny bit of fundamentals in the ebb and flow on wall street i'll sit quietly. my coal and ore is already screwed. maybe if i get back to a 50% loss i'll sell and short.

did you notice that china is making noises about building 3 railroads and rebuilding a few earthquake torn provinces eg steel may be back?

Joy Global at the Heart of the Commodity Machine

the mining and metals industries were caught short when the 'boom' got momentum 'in the day' before the olympics. companies like arcelor-mittal, vale and posco reacted with a buying frenzy for ships, port developments, mines and buying and merging with other companies. in fact, they were still investing heavily while wall street bemoaned economic stagnation and slow downs. now, cut short in the current precipitous and rapid slow downs we see 40% and 50% cuts; closings, layoffs, cancelled or delayed capital investments not to mention defaulted shipping contracts. will they be 'blind-sided' when the still unbuilt infrastructures in asia and the bric countries get back on track? but would they need new equipment from joy and bucyrus? was that investment covered during the 'frenzy'.

Recent World Events Are Bullish for Metals

i think your coal analysis is not really on the mark. first of all different types of coal have different functions in industry / economy and have different rates of scarcity. everything i see says that as long as steel demand persists the demand for metallurgical coal will exist and that is the scarcest coal and/or the hardest to mine, transport, etc. as long as power generation climbs coal use will climb. notice that several coal producing nations are trying to stop exports with extreme tariffs.

the quality of coal varies a lot. it seems that some of the largest unmined sources are in the powder river area. this coal is not of high quality and is costly to move, esp abroad.

i admit some things driving coal up will abate; i refer to the weather damage in australia which was severe. however the demand for coal per steel and per good quality coal for electricity, steam will maintain. demand is in fact a great deal more than supply vis a vis specific as above. large numbers of coal users including in the u.s.a. are scrambling.

i think a more interesting question is that of an agenda to unify dry bulk shipping, coal, iron ore and steel production within the same company [see SID of braqzil} this begs many interesting angles to study.

finally eskom. i have never been to s.a. reading several s.a. papers however i get the distinct impression that eskom is the victim of bureaucracy and stone-dense stupidity, shortsightedness and dismal failures in planning. to me it looks as though the chiefs of eskom did not buy coal for the future generation of power fearing looking bad given that high cost of coal would be beyond estimates and would cause a deficit and no doubt criticism from the government, threatening job security at eskom upper management. looks like while coal was rocketing into record costs these guys were in their hot tubs. just a surmise on my part but i feel like i am thinking in the right direction.

don't be surprised if the government cedes new consessions to foreign mining investors in particular. these are branches of huge multinational corps. perhaps such firms would even spend money to prop up eskom just to be able to function.