Any Canucks know of any cheap Coal stocks out there, recently bought CBT.v which has doubled in two weeks, any others look interesting?

In essence CMK.to is still cheap...they are spec but starting production now and plan to produce 2-3 million ton met coal a year...with huge reserves....could be a double in 2011....If coals all go up GCE will keep going up and has the WTN/buyout factor...but PCX is the most levered to met coal and the most undervalued...IMO PCX is currently trading at a 3-5 billion dollar discount to its similar peers...PCX has the most upside for real large producer.

Queensland floods to send coking coal prices higher

India Infoline News Service / 18:12 , Jan 06, 2011
The supply outages in Queensland is adding pressure to an already tight market for hard coking coal. As a result, steelmakers in Asia may be forced to pay as much as 33% more for the commodity.

Coking coal prices are all set to climb after the worst floods in 50 years inundated mines in Australia's so-called 'sun shine' state, prompting the producers of the steelmaking material to warn on supply disruptions.

Mining and metals analysts are trying to work out the potential impact of production outages at the region’s coal mines amid no signs of the inclement weather relenting in the coming days and weeks.

The supply outages in Queensland is adding pressure to an already tight market for hard coking coal. As a result, steelmakers in Asia may be forced to pay as much as 33% more for the commodity.

Prices may increase to between US$270 and US$300 a metric ton, Macquarie, Morgan Stanley and Daiwa Capital Markets said. Mills agreed to pay US$225 a ton for the three months starting Jan. 1, Bank of America Merrill Lynch said last month.

Queensland floods in 2008 left steel producers with a threefold increase in annual contract prices to about US$300 a ton.

Queensland accounts for the majority of the premium hard coking coal supply on a global seaborne basis. Queensland is the biggest global exporter of coal used in steel production.

Collins Stewart believes the current situation is worse than the 2008 flooding, as more mines and transportation infrastructure have been affected this time. About 37% of the world’s traded coking coal has been affected, according to Macquarie.

Mines affected in 2008 took at least six months to recover from the disruption and return to full capacity. The cumulative loss of production is expected to maintain upward pressure on spot prices for several weeks.

Coal stockpiles at Gladstone harbor in Queensland are very low after flooding shut a rail network. Eighteen ships are waiting to load and 12 more are expected at the harbor in the next 10 days.

Meanwhile, Queensland coal miner Macarthur Coal stated on Wednesday that its now expecting first-half profit at the low end of its forecast range due to production issues.

Peabody Energy, Rio Tinto, BHP Billiton, Xstrata and Anglo American have all declared force majeure in the region, which means they won’t be able to meet contractual obligations due to unforeseen circumstances.

About 98 million tons of capacity to produce steelmaking coal is under force majeure, equivalent to 73% of Queensland exports.

Australia shipped 259 million tons of coal for steel and power in 2009, according to the World Coal Association.

Australia is the largest producer of coal used in steelmaking, contributing more than 40% of the global seaborne trade, according to Deutsche Bank AG. The country is the second-largest exporter of the commodity after Indonesia.

Coking coal suppliers traditionally hold annual talks with steelmakers to fix benchmark contracts for the 12 months from April 1.

Steelmakers may agree to monthly pricing for coking coal, as proposed by BHP, in the current environment rather than locking in US$300 a ton for a whole quarter, Macquarie says.

There will be a material impact on Australian exports of coking coal, even if no further rain falls, Morgan Stanley adds.

Flooding is also affecting thermal coal, used by power stations, driving the price of supplies at the port of Newcastle in Australia’s New South Wales, the benchmark for Asia, to the most in 27 months.

Prices jumped 3% to US$126.10 a ton in the week ended Dec. 31, the most since Oct. 2008.

http://www.indiainfoline.com/Markets/New....

The rain is subsiding but mainly centered in the S/E of the state atm. Cleanup is going to take some time.

follow link for legend
http://www.bom.gov.au/australia/charts/s....
Latest


4 day forecast
Jan-09-02:54:17


Queensland Rainfall and River Conditions
24 Hour Rainfalls
River Conditions
http://www.bom.gov.au/qld/flood/

Rained up to 8 inches near Bowen basin where all the met coal is at this weekend....and where most damage to ports, roads, rail infrastructure. This area had a hard time meeting production quotas through mining and transport to port pre flood let alone post flood.

What I have been using for weather

http://www.bom.gov.au/weather/radar/

One example of major coal mine in the basin

http://www.youtube.com/watch?v=zCjdRVlKy....

"MINES in the Dawson Valley could be closed for months, with flood damage to mines, mining equipment and rail infrastructure causing havoc."

And on Friday two days post breech from first video

http://www.youtube.com/watch?v=M1dnsycB1....

This is just the beginning IMO for the ramifications for some US AP met coal producers....this will have a ripple effect over the next year in huge price increase as long as demand stays strong....and it was already an extremely tight market well before the flood.

Lowpdop - thank you

Prophecy Resource Corp. (PCY:CA)

"U.S. coal companies are rushing to fill the vacuum left by flooding in Australia that disrupted mining and sent buyers scrambling for new suppliers."

"Coal companies, particularly those in Central Appalachia the world's second-biggest exporting region for metallurgical coal, are fielding inquiries from overseas buyers. "It puts us in a terrific position,"

"The U.S. is going to have all the demand for export coal that it can handle in 2011,""

"Flooding in Queensland, Australia, the world's No. 1 export region for the coal used by steelmakers, has taken an estimated 13 million metric tons of metallurgical coal out of the seaborne market in recent weeks."

"Industry analysts say U.S. coal exports could climb about 10% this year"

omething different from last time there was 300 met and flood in 2008;
"The rapid growth in Chinese demand for metallurgical coal is helping drive interest in U.S. exports.Last year, China imported 18% of global seaborne metallurgical coal, up from 3% in 2008, when metallurgical coal prices soared to $300 a metric ton. "

http://online.wsj.com/article/SB10001424....

More coal mines closing as flooding SPREADS not recedes...just beginning folks...the best plays are the ones that have the most to move like PCX which last time met was 300 and flood it went from 23.50 to 85 per share in 3 months...and unlike last time PCX has increased met coal production by millions of tons and are unhedged so they can take advantage of the prices/flood.


WRAPUP 1-Australia floods close more coal mines, rail line


Tue Jan 11, 2011 5:50am EST

* New Hope suspends operations at Queensland mines

* QR National closes rail line, cutting off Peabody mine

* Buyers of Aussie coal look elsewhere as floods worsen

* Coking coal prices could soon hit record - Moody's

By James Regan and Rebekah Kebede

SYDNEY/PERTH, Jan 11 (Reuters) - Australia's flood-stricken coal sector suffered more setbacks on Tuesday as monsoon rains flooded out another rail line and forced more collieries to close.

New Hope Corp -- until now untouched by the flooding that affected the operations of more than 40 coal mines further north -- suspended all operations on Tuesday as the rains transformed southeastern districts into inland seas, shutting another 6 million tonnes of thermal coal capacity. [ID:L3E7CB021]

Asian buyers of Australian coal -- a mainstay of the national economy -- are increasingly turning to alternative suppliers as far away as the United States and South Africa, as forecasts show the rains are set to continue.

"People are turning their minds towards months rather than weeks for mine and operation repairs," UBS commodities analyst Tom Price said.

A South Korean utility had bought a cargo of South African coal to make up for lost Australian supplies, a source with knowledge of the deal said. [ID:nTOE70A07H]

"We are still looking for March-loading supplies. We think it's better to play it safe since we don't know how long the disruption in Australia would last and there's a chance that Indonesia could also be affected once the wet season comes," said a source from one of the country's utilities.

Queensland's coal outages represent about 41 percent of the world's metallurgical coal exports and 8 percent of the world's thermal coal exports, according to Australia & New Zealand Bank.

Three quarters of the state has been declared an emergency zone because of the floods, which have killed 13 people and caused widespread evacuations, according to police. [ID:nL3E7CA224]

COAL PRICE SQUEEZE

Global metallurgical coal prices could soon exceed the record highs of 2008, when heavy flooding last hit Australian collieries, Moody's said in a special report.

http://www.reuters.com/article/idUSL3E7C....

There is a lot of activity with companies trying to purchase coal assets by purchasing mineral interests. A large defined coal asset located in Western Colorado was sold via a quiet land sale last week. Another large dormant coal mine is being purchased for development in a natural gas area north of the other purchase.

Coal interest is very active. Australian, Chinese and American firms are knocking on doors. Aussies want to lease, Chinese want to buy. Americans are carrying cash.

There is money shopping for resource. Lots of lawyers phones ringing around the state.

Heard from a bird.

Analysts predicted Wednesday possible US$400 per ton Met Coal
Analysts Wednesday predicted the price of coking coal, Queensland's largest export, could near-double to US$400 a metric ton from US$225/ton as a result of cuts to production caused by the flooding. Australia supplies two-thirds of the sea-borne trade in the hard coking coal used in steel making."

http://online.wsj.com/article/BT-CO-2011....

Stick with the coal companies that mainly produce met coal IMO.....right now met coal has way more pricing power and is getting precedence with coal companies and rail/port capacity for charges over thermal coal.

Guess we will skip the 300 per ton met coal speculation last week and speculate on a jump straight to 400 per ton met coal now.

PCX just keeps running.... never owned a parabolic stock :)). Great call. Hopefully market holds up until the summer.

Australia mines need months to pump out flood waters


This is even more bullish for met coal tonight.

Australia mines need months to pump out flood waters
Fri Jan 14, 2011 3:27am GMT

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[-] Text [+]

SYDNEY Jan 14 (Reuters) - Coal mines in Australia's flood-ravaged Queensland state could take up to six months to return to full operation as the lack of water pumping and storage capacity is slowing efforts to clear pits, mining contractors said.

"There's just nothing left to hire, all the pumps are working non-stop," said Dave Walker, who manages water pumping for Total Water Management. "It could be months before all the water is out."

Australia accounts for about two-thirds of global coking coal trade and Queensland produces roughly 90 percent of Australia's share.

The price of Australian premium coking coal has jumped 35 percent since flooding begun, forcing nearly 50 mines to shut, and eventually flooding Brisbane, the nation's third biggest city.

"Production has restarted in a few places and the lucky ones will be clear in two to four weeks but some mines will take three to six months," Walker said.

Warrick Ryan, an Operations Manager at Bowen Basin Hire, which rents out pumping equipment, said the pump capacity is only part of the issue as many mines simply lack the water storage capacity to clear pits.

"You can't just run the water into the creek, you have to store it somewhere and many places are running out," Ryan said.

"I'd say it'll be three to five months before all the water's knocked out if there's no more rain."
Open pit mines bore the brunt of the flooding, while underground deposits largely escaped damage. Open pits are excavated by chiseling ever-deeper ledges out of rock from which the coal is mined.

http://af.reuters.com/article/metalsNews....

Other considerations are the enviro laws which will complicate matters as well. They cannot just pump the contaminated water out of the mines and down the creek or river.

Those rail lines that where not heavily affected will be on greatly reduced speed.

pcx down 6% today.

About time it pulled back.... I have a way of putting a hex on any good stock run :)).

All coals down 3 to 7.5% day

not PCX specific.

The Goldman Sach said to sell coal 2 days ago and the fast money guys have said the same for 4 days.

they all were do for a pull back...many though IMO, in particular PCX, has a long way to run higher in 2011.

good it was GS... I was thinking it was me :))

500 per ton is a huge number...IMO big boys want more shares for next run up and induced sell off

As reported
USA spot prices are already 266 for high vol met coal and 306 for low vol met coal as of friday.

Now 400-500 per ton speculation?

Also shipping rates are plummeting which should make it profitable for coals to ship...130+ ships sit waiting for coking coal a string 20 miles long at present.

the flood is 2-4 times worse then the 2008 flood when it comes to supply effected....there is already more tons taken out of the met coal yearly supply the last month then the entire 2008 flood took out of ~8million tons.


Coal price could hit $US500 a tonne after the floods, analysts warn

* January 17, 2011 12:00AM


THE price of coal could soar to $US500 a tonne following the Queensland floods, with more than half of Australia's coal exports affected.

Wood Mackenzie, which analyses the energy and metals industries, said about 46 mines were affected by the severe flooding, with 91 per cent of Australia's coking coal exports hit.

The analysts said that because of the intensity of the rainfall it was reasonable to assume that hard coking coal prices could rise to between $US400 and $US500 a tonne.

"Market factors support the case for a coal price movement exceeding that of prices due to the 2008 Queensland floods," the analysts said.

The January 2008 floods saw the contract price for coal triple to $US300 a tonne and the spot price peak at $US400 a tonne.

Analysts have widely tipped the price to exceed these levels because the recent floods have been more severe than those of 2008.

Wood Mackenzie's analysis says that while the overall production loss is still uncertain, if all 46 mines cease production for one month, the export impact would be 14 million tonnes.

"The supply of coking coal has been tight through 2010, supporting prices well above the cost of marginal production," the report says.

"Therefore, most supply regions have been producing at capacity and replacement tonnage will be difficult to secure."

Researcher IBIS World estimates that the floods have resulted in $2 billion in lost coking coal production and the firm is tipping a rise in the spot price to $US400 a tonne and an average $US300 a tonne for the March contract prices.

The shutdown of the Queensland coal chain has forced ports to run down coal stockpiles, creating an export shortfall of more than 1 million tonnes a week, according to IBIS.

The researchers said more than 15 million tonnes of coal that would otherwise have been shipped had been lost since the floods began in December.

"The industry could take months to recover from the deluge, with production unable to restart until floodwaters are drained from mine pits and roads, damage to infrastructure is repaired and rail and port access points are restored," IBIS says in an economic impact report on the floods.

"Miners are also expected to be hampered by environmental regulations on water discharges from mine pits and legal issues arising from declaring force majeure on contracts and failing to adhere to strict health and safety standards."

Mining is not the only major sector to be significantly affected by the floods, with IBIS predicting severe losses for the agriculture, tourism, insurance and transport and logistics industries.

It says that agriculture -- particularly vegetable and fruit growers, cotton, sugar, grain and livestock farmers -- will be hard hit, with total estimated losses of $1.6bn.

"This is expected to flow on to a short-term price spike for food, with prices expected to rise by up to 200 per cent," the researchers say.

Despite the wide industry losses, the construction industry is expected to see a $10bn revenue boost from the devastating floods as the state rebuilds.

"We expect significant lost productivity in the short term, with work currently stopped on approximately $5bn worth of commercial projects," the researchers say.

"In the long term, the cost of replacing destroyed infrastructure . . . will prompt a mini-boom once the water has subsided," said IBISWorld general manager Australia, Robert Bryant.


http://www.theaustralian.com.au/business....

no link (subscriber only)

Quote:

14 - January 2011

Coal shipments from the First Berth at Canada’s Westshore Terminals will be suspended for at least two weeks following the failure of the gearbox controlling the boom of the shiploader. The port typically handles about 2 million tonnes per month of metallurgical coal and is a key supplier to Asian steel mills.

Yesterday I posted last weeks developments in the coking coal sector as related with supply demand, flood analysis and the coking coal price.

http://www.stockhouse.com/Blogs/ViewDeta....

Four interesting pieces of information can be added to the story in the last 24 hours. First the condition of rail operation, 2nd the percent of mines operating, 3rd the process of pumping the mines, and forth the weather.

First is the condition of infrastructure damage to rail; last week the rails said many key rail points would be opening last weekend, yet today we get this.

"Rail firm QR National , the biggest coal freight firm in the state, has been working around the clock to reopen rail lines and said some key lines would be back in service this week."

"However, it is also clear that the restoration of rail services to mines west of Brisbane and in the Surat Basin are going to take much longer," Queensland Resources Council Chief Executive Michael Roche said"

So how much of the "key" rail was actually opened or not opened last week? It appears that not so many "key" rails have been re-opened as first assumed, and others may be out of commission allot longer. how is this going to effect future supply since the area was already having huge issues with bottleneck and rail issues running in good weather and at 100% rail capacity?

http://www.reuters.com/article/idUSL3E7C....

Second information is on the % of mines in operation, it was just reported:

"Only 15 percent of the 57 coal mines in Australia's Queensland state are in full operation after devastating floods, while 60 percent are operating under restrictions and 25 percent are yet to resume operations, the Queensland Resources Council said."

As a guess that 15% is likely all underground mines relatively unscathed by the flood, the rest are open pit mines that bore the brunt of the damage.

Third it was reported late last week and in the blog yesterday that there were not enough pumps in Australia of adequate size to pump out all the water, and that estimates from pumping contractors are 3-5 months to remove the water from the worst flooded mines. It was also touched upon that even those that have pumps are running out of space, or have no space to pump the contaminated coal water. A report tonight states that, "The Queensland Government says mines won't be able to start pumping water from their flooded sites until they're certain it won't contaminate water supplies."

This begs the question, because of the extent and magnitude of the flood, have most mines reached full pumping capacity already at the 60% "operating under restrictions" mines? And if so then what is the real rate of production currently or near to mid term? No one can answer, but appears to be even more restricted then earlier assumed.

One big road block is as the main flood recedes the pits have nowhere to pump the coal water accept there disposal pits, which are apparently all or mostly full at present. In the 2008 flood, coal companies contaminated the water supply; "In 2008, the Fitzroy River was contaminated when a mine pumped water from a flooded pit near the town of Emerald". "The Department of Energy, Resources and Mines' Mark Evans says testingwill ensure a repeat of from the 2008 floods wont happen again"."It contains limits on the concentrations that can be discharged, volumes," he says."In some circumstances because of the volume of water they may haveaccumulated it may not be possible for them to meet the standardenvironmental authority conditions."

http://www.abc.net.au/rural/news/content....

It seems that as of tonight there are stricter regulations in place for the disposal of water then in 2008, this should also reduce progress regaining coal operational status, as this situation is becoming a large political and environmental debate.

Last is the weather, three cyclones are currently off the coast of Queensland and Australia, while none of these pose a direct threat, one will still cause more rain in the Bowen basin and effected area of coal concern, "which could set back flood recovery this week". The traditional rainy season in this area still has ~3 months left in a La Ninia year; it should be assumed they will get more rain and often over the next couple months.

As of friday US met coal was trading for 266 for high vol Ap met and 806 for low vol US met; Platts reports tonight that Australian coking coal price "jumped up to $US350 per tonne on the Platts index on Friday, and at $US355 for coal from the Peak Downs region in Queensland"

http://www.cairns.com.au/article/2011/01....

UBS now suggests 400 per ton can be achieved along with Wood Makenzie rising expectations to possible 400 to 500 per ton met coal; Goldman Sachs a more conservative 290 per ton but expects 2012 Met coal price to be 240 per ton.

These factors tonight add a little more to the coking coal story that was blogged yesterday.

The coking coal equities sell off last thursday and friday was misplaced IMO longer then for a few days, and even if some carry through downward pressure next week look to add your favorite coal names as this flood and coking coal story is far from over and should underpin met coal price and supply throughout the year.

Long PCX

Coking Coal Producers:
PCX, ANR, WLT, MEE, PUDA, SCOK, GCE.to, CMK.to,

A couple more cheap coal plays are NAG.V ($0.12) and Royal Coal (RDA.V) at .35 , here is a little snippet from NAG this past summer:

"North American Gem #2 Mine contains Blue Gem and Jellico coal seams and will be North American Gem's first opportunity to produce highly-valued Blue Gem Coal.

"Blue Gem Coal is a rare and increasingly valuable seam of coal used in the production of silicon metals," explained Charles Desjardins, President of North American Gem. "Producing Blue Gem Coal has been our primary strategic business focus; this new mine is a significant step forward for the company and we are aiming to achieve our goal of becoming a long-term Blue Gem Coal producer."

Blue Gem Coal commands a price as much as 200% higher than high-quality steam coal and is typically the highest priced grade of coal produced in the United States"

Royal has ties with Sandstorm Energy, the spinoff from Sandstorm Resources, another play in this space:

Toronto, Ontario – November 26, 2010 – Royal Coal Corp. (TSX-V:RDA) (“Royal Coal” or the “Company”) announces that it has entered into a coal purchase agreement with Sandstorm Metals & Energy Ltd. (TSX-V:SND) (“Sandstorm Energy”) to acquire 18% of the first six million tons of coal produced, and thereafter 12% of the life of mine coal produced from the Company’s following surface coal mining projects in Eastern Kentucky, USA:

Sold my NAG.v still long CBT.v

Queensland Cuts Coal Output Forecast 10.5% on Floods

That is now an expectation of 21 million tons of coking coal gone for the year, "forecast to be 177.3 million metric tons, down from an initial projection of 198 million tons,"....There is NO making this back within the next 12-24 months...It does not matter if it all turns around in 4 weeks that coal is gone and coking coal as any commodity is priced on the margin....just to much gone now coking coal will be elevated for 1-2 years and the Aussie companies WILL make it so to make up for losses...substituting higher price for lost volume.

This flood is already 2.6 times worse for the coking coal lost then in the 2008 floods that saw 300 per ton contract and 375 spot...and there is probably allot more rain on the way

Queensland Cuts Coal Output Forecast 10.5% on Floods
By Ben Sharples -

Queensland cut its annual steelmaking-coal output forecast by 10.5 percent and said it expects resumption of normal mining to take as long three months after floods in Australia, the biggest exporter of the fuel.

Coking-coal output in the 12 months ended June 30 is forecast to be 177.3 million metric tons, down from an initial projection of 198 million tons, Mines and Energy Minister Stephen Robertson said in a telephone interview. That compares with 182.1 million in the year ended June 30, 2010.

‘Critical Low’

Train services will restart on some parts of the Blackwater rail line today, transporting coal to the export harbor of Gladstone, QR National Ltd. Chief Executive Officer Lance Hockridge said in a statement. The track has been closed since Dec. 27 because of flooding.

“Our stockpile remains at a critical low of just over 300,000 tons,” Gladstone Ports Corp. Chief Executive Officer Leo Zussino said in an e-mailed statement. “We would expect to be able to load around 2 million tons of coal this month with the port reaching full capacity by the end of March.”

Australian hard prime coking coal used by steelmakers sold for $280 a metric ton on average last week, up from $265 the week before, according to IHS McCloskey, a Petersfield, U.K.- based provider of coal data. Prices may reach $300 a ton this year, McCloskey said Jan. 17.

http://www.bloomberg.com/news/2011-01-19....

U.S. Coking Coal Exports Set to Rise on Australia's Flood Delays

By Vanessa Cross
Published Jan 18, 2011

Australia supplies more than half of the global exports in hard coking coal, a prime commodity used in steelmaking. Flooded mines in the Queensland state has increased alternative export sources for coking coal, including from U.S. coal mining firms.

The Queensland Resources Council (QRC) estimates about “15 per cent of the state’s coal mines are in full production, with 60 per cent operating under restrictions and a further 25 per cent yet to resume normal operations," according to an 1/17/11 statement by Michael Roche, QRC chief executive.

Macquarie analysts estimate that about 37 percent of the world’s traded coking coal is affected by the Australian floods. Both Macquarie and Morgan Stanley have raised forecasts for coal, among other commodities, according to the WSJ.com. Macquarie raised its forecast estimates 10%-15% for hard coking coal over the coming 12 months.

"It will be good times for the U.S. coking coal guys," said James Thompson, managing editor for U.S. Coal Review. "We're seeing more demand for U.S. coal, and we'll see higher prices.

By 1/12/11, international coking coal rose to USD 295 a tonne. Energy Publishing Inc., a Tennessee based data provider, reports that low volatility coking coal spot prices increased 9.4%, or USD 26.25, to USD 306.25 a tonne a week later.

Xcoal Energy & Resources, the Pennsylvania-based coal export firm, also raised its coal export estimates for 2011 by 8-10 million mt, according to a company statement issued 1/17/11. Xcoal Energy exported 55 million mt of coking coal in 2010.

http://www.suite101.com/content/us-cokin....