More From Mike Sonnenberg
The must-know dynamics of the global power industry
In this series, we’ll look at the structure of the thermal power industry before moving on to focus on the power generation equipment sector.
The major sub-industries of the global power equipment industry
The power generation equipment industry is made up of various sub-industries, each with a structure of its own.
Challenges before Peabody Energy’s US operations in fiscal 2015
The retirement of coal-fired power plants and the impact of new regulations proposed by the EPA present two major blows to the US thermal coal industry.
Must-know: Why Peabody Energy fell 1.9% on July 22
Wall Street analysts’ consensus estimate for loss per share was $0.289.
Why we’re not seeing capacity additions from coal-fired plants
The first half of 2014 saw 4,350 MW (megawatts) of new electricity generating capacity, according to the EIA (Energy Information Administration). Of this, 2,319 MW, or 53.3%, was natural gas–fired.
A lower-than-expected natural gas draw-down – what does it mean?
According to the EIA, 115 Bcf of natural gas was drawn out during the week ending January 30. It was a lower-than-expected draw-down.
Uptick in price of natural gas gives hope to coal producers
The marginal increase in natural gas prices last week is good news for coal producers (KOL), especially the ones in the Appalachians and the Midwest.
Overview: A key guide to investing in exchange-traded funds
This series is our attempt to educate our readers about leveraged and inverse ETFs, their structure, and their suitability for retail investors.
PRB coal producers may benefit from restocking at utilities
At the beginning of winter, the PRB coal producers are struggling to get enough rail cars to meet utilities’ demand. The PRB coal producers may see increased demand well into 2015.
Coal Prices Stabilized Last Week after the Previous Week’s Fall
PRB coal prices have remained under pressure since the start of the year due to low natural gas prices.
Natural gas prices stay pressured on a predicted warmer winter
Natural gas prices and coal’s market share in electricity generation highly correlate. When natural gas prices rise, coal gains market share.
Powder River Basin Coal Breaks the $10 Barrier: Will It Stay Up?
Powder River Basin coal prices averaged $10.55 per ton for the week ended July 24. Prices averaged above $10 a ton for the first time in the last five weeks.
Why Are Utilities Not Stocking Cheap Coal Aggressively?
Coal is an important commodity for railroad companies such as Union Pacific (UNP) and CSX (CSX). However, coal’s importance in freight is falling due to the emergence of shale oil.
US Electricity Generation Rises in Week Ended September 4
Electricity generation in the US increased to 86.8 million MWh for the week ended September 4, a 4% increase from the previous week’s 83.5 million MWh.
Rising Natural Gas Inventory Makes Coal Producers Sweat
The change of 94 Bcf in the underground natural gas inventory during the week of August 28 came in higher than Wall Street analysts’ expectation of 84 Bcf.
BYND Leads Alt-Meat Market, Faces New Competitors
On Friday, investment bank UBS started coverage on Beyond Meat Stock (BYND). At 10:08 AM ET today, the stock was trading 4.4% lower at $76.5.
Crude oil prices recover a bit—what does it mean for coal?
Crude oil prices as of January 22 Crude oil prices recovered marginally during the week ended January 22, 2016. WTI (West Texas Intermediate) crude oil prices closed at $30.99 per MMBtu (million British thermal units) on January 22, 2016, compared to the closing price of $29.42 per barrel on January 15, 2016. Meanwhile, Brent crude […]
Cloud Peak Energy: How Does the Company’s Near Future Look?
While its sales came in lower than analyst estimates, Cloud Peak Energy (CLD) beat analyst estimates on the adjusted net losses front in 2Q15.
Coal producers are feeling the heat
So far, the milder weather this winter kept natural gas prices subdued. As a result, coal producers (KOL) are under pressure. The current environment isn’t encouraging for coal.
Assessing Arch Coal’s Powder River Basin Coal Shipments in 3Q15
Arch Coal sold 29.5 million tons of PRB coal in 3Q15. This was up from 29.3 million tons in 3Q14 and 25.5 million tons 2Q15 due to higher demand.
Peabody Energy and Alliance Resource dominate the Illinois Basin
Peabody (BTU) is the largest reserve holder. It’s the second largest producer in the ILB. It shipped 30 million tons in 2013. The company runs three underground mines and five surface mines in the region. BTU’s coal is shipped to utilities in the region. It’s also exported to Europe through the Gulf Coast.
Gauging Arch Coal’s Net Losses and EBITDA in 3Q15
Arch Coal reported adjusted EBITDA of $134.8 million in 3Q15 compared to $71.9 million in 3Q14 despite the pricing pressure it experienced during 3Q15.
Must-know: An overview of the US coal industry
With just under a billion tons produced in 2013, the U.S. ranks second in coal production. China is the largest producer with 3.7 billion tons. However, the U.S. holds much higher coal reserves at 237 billion tons—over a quarter of the world’s coal reserves. China has coal reserves at 114 billion tons. At the current consumption rate, the U.S. reserves can last for over 200 years.
SUNE’s TerraForm Global Goes Public, to Focus on Emerging Markets
After launching TerraForm Power (TERP) in 2014, SunEdison (SUNE) launched an IPO of its much hyped emerging market yieldco, TerraForm Global (GLBL), in July 2015.
Falling Temperatures Give Energy to Coal Producers and Utilities
More than 90% of the coal produced in the US is used for the generation of electricity, meaning that the power utility segment is coal’s largest end user.
Why GE and Siemens are investing heavily in gas-fired technology
With established market positions and diversified product offerings, GE and Siemens are poised to benefit from investments.
Why the Powder River Basin produces more coal with fewer mines
The western region in the U.S. includes the area west of the Mississippi River. The region produced 520 million tons of coal for the 12 months ending September 11, 2014. The entire U.S. produced 974 million tons of coal during the same period. The western region accounted for 53% of the total coal production in the U.S. It’s important to note that 13 out of 24 western states produce coal.
Why Cloud Peak Energy is well positioned to survive the downturn
Unlike its peers (KOL) like Walter Energy (WLT), Alpha Natural Resources (ANR), and Arch Coal (ACI), Cloud Peark doesn’t have any exposure to metallurgical coal.
Why Russian coal could hinder US coal exports to China
Coal accounts for less than a 20% share in electricity generation in Russia (RSX). Coal production is much higher than the domestic demand. As a result, most of Russia’s thermal coal is exported.
Hang Seng Falls 2.4%, KOSPI over 3%, NIKKEI ~1%
Hong Kong’s Hang Seng Index, which generally follows the mainland’s lead, closed 2.39% lower at 28,311,07 on May 9.
2015: A Year of Bankruptcies in the Coal Sector
Arch Coal (ACI) has narrowly escaped bankruptcy in 2015 so far. However, it may happen anytime, considering the dilapidated situation of Arch Coal’s finances.
Utilities Sector: Stock Market Update for Week Ended July 17
Of the 41 utilities stocks we track, 30 gained during the week ended July 17. A positive Greek deal cheered markets globally, and dovish comments by the Fed pushed mid-to-long-term bond yields down.
Coal Shipments Continue to Rise amid Weak Natural Gas Prices
According to EIA estimates, US coal shipments increased marginally to 18.7 million tons during the week ending August 28.
Why Coal and Utilities Indicators Matter To Long-Term Investors
Thermal coal is mostly used for electricity generation. So the state of the utilities sector is by far the biggest driver of the coal industry.
Why thermal coal industry indicators are important for investors
Currently, the coal industry is going through heightened volatility. As a result, it makes even more sense for us to cover the short-term indicators.
Why survival is for the fittest of US coal producers
Met coal producers are the worst hit in the current energy environment. Based on our analysis so far, we can conclude that the higher the revenue share of met coal, the steeper the stock prices fell in 2014.
Gainers in the Utilities Sector on April 22
After falling by 0.9% on April 21, the Utilities Select Sector SPDR ETF (XLU) posted marginal gains of 0.2% on Wednesday, April 22.
George Soros Buys Slack, Increases SPY Short Exposure
The 13F filing showed that George Soros bought almost 500,000 Slack (WORK) shares at an average price of $37.5 per share during the second quarter.
The must-know outlook for equities and bonds in 2014
The Fed, in its latest announcement, has further reduced its bond buying program to $55 billion a month, signalling that the improvement in the economy is on track.
Keeping Up with Sharing Economy IPOs Fiverr, Slack, and RealReal
While May was marked by Uber’s (UBER) flop IPO, June saw three sharing economy IPOs do great on their debuts, meaning windfall gains for early investors.
Hang Seng and Nikkei 225 Lose amid Trade Worries
After rising marginally yesterday, Hong Kong’s Hang Seng Index fell today. The index lost 1.15% to end at 28,185.98. Only seven stocks in the index rose, while 39 declined. Four remained unchanged. Tencent Holdings (TCEHY) was one of the worst performers with a 1.8% fall.
Indicators affect regional coal producers differently
Peabody Energy (BTU), Arch Coal (ACI), and Cloud Peak Energy (CLD) are major coal producers that operate in the Powder River Basin region.
China—global iron ore and met coal industry’s lifeline
China accounts for almost half of the world’s raw steel production. In 2013, China produced 779 million tons of steel. This was a 7.5% increase over 724 million tons in 2012.
Coal is losing its market share in China’s electricity generation
Coal is the cheapest fossil fuel, but it’s also the most polluting. With its massive electricity generation capacity—mainly coal-fired—China emits the most carbon dioxide in the world.
Ford Mach-E Sold Out – Should Tesla be Worried?
Yesterday, Ford announced that the registrations for the high-end version of its first all EV (electric vehicle), Mustang Mach-E, are full.
Westmoreland Coal Company is probably the strongest US coal name
Westmoreland Coal Company (WLB) operates a unique business model of supplying coal to power plants in the vicinity of mines through cost-effective transportation modes on long-term, cost-protected contracts.
Analyzing Walter Energy’s 1Q15 Costs and Profitability
Walter Energy’s 1Q15 net losses were $80.2 million, compared with $92.2 million in 1Q14. The lower net loss largely resulted from a $58.6 million gain on the extinguishment of debt.
China’s thermal coal imports—who benefits?
Apart from shipping companies, coal producers (KOL) around the world benefit from China’s coal imports. However, competition in the Pacific market remains steep.
Evaluating Arch Coal’s Bituminous Thermal Coal Costs in 3Q15
Operating costs for Arch Coal’s bituminous thermal segment dropped in 3Q15. Operating cost per ton hit $24.63, higher than in 3Q14 but lower than in 2Q15.
Did last week’s indicators impact thermal coal prices?
Central Appalachian thermal coal prices came in at $50.90 per ton for the week ending February 6. Coal prices increased—despite the fall in natural gas prices.
Why outlook is bleak for US coal producers
In this series, we’ll analyze major coal producers’ debt and liquidity positions, cash burn, probability of default and credit ratings in an attempt to find out which company will be next.
Coal Shipments Rise as Temperatures Drop
According to the EIA, US coal shipments rose to 16.1 million tons in the week ending December 4, compared to 15 million tons in the week ending November 27.
Uber Stock Rises Even as Kalanick Sells Shares
Yesterday, Uber (UBER) co-founder Travis Kalanick sold about 20 million UBER shares, raking in over half a billion dollars.
Hang Seng and Nikkei Post Marginal Gains on June 24
After falling on Friday, the Hang Seng Index started the week of the G20 meeting on a positive note. The index gained 0.14% today. Last week, the index gained 5%, and Friday was the only it posted losses during the week.
Why investment-grade bond issuance last week beat expectations
Investors willing to take a little higher risk than what they find in Treasuries, if they’re in search of higher returns, can consider investing in investment-grade corporate bonds.
KOSPI, ASX 200, and NZ 50 Gain, Singapore Index Is in the Red
South Korea’s KOSPI remained in the green on May 15. The index gained 0.53% on the day to end at 2,092.78.
Volkswagen Pushes for 1 Million EVs by 2023
We’re still trying to digest the news about Tesla buying land for Gigafactory 4 in Volkswagen’s backyard. Volkswagen just accelerated its EV plans.
Elizabeth Warren Targets WeWork’s Layoffs and CEO
Last week, CNBC said that WeWork (WE) is firing 2,400 people. Supposedly, this will “create a more efficient organization.”
Yieldco: A Green Investment Option That Pays
While REITs started trading in 1951 and MLPs started off in 1981, the first yieldco was floated in 2005 by Seaspan Corporation, a shipping company.
Trump Hits at China, Causes Havoc in Asia
President Trump tweeted that the duty on $200 billion worth of Chinese goods will increase by 15 percentage points from 10% to 25%.
Natural Gas Prices Lean Hard on Coal in Mid-December
Henry Hub benchmark natural gas prices rose in the week leading up to December 11. But the benchmark natural gas price fell to $1.77 per MMBtu on the day.
Why natural gas injections affect thermal coal demand
Coal’s share in electricity generation is down from over 50% in 2004 to 39% in 2013. During the same period, natural gas’ share increased from 18% to 27.5%.
First Solar faces some must-know challenges
While First Solar has traditionally been manufacturing thin-film CdTe modules, which don’t require polysilicon, their prices have fallen in recent years.
What Does a Spike in Coal Power Plant Utilization Rates Mean?
The EIA published its latest report on capacity factors for power plants on July 27. Coal-based power plants surpassed natural gas-based power plants in utilization.
How Arch Coal’s Rise in Bituminous Thermal Coal Volumes Hurt Prices in 3Q15
Arch Coal’s Bituminous Thermal coal segment sold 2.3 million tons in 3Q15 compared to 2.2 million tons in 3Q14 and 1.9 million tons in 2Q15.
Why Kocherlakota concludes that the FOMC is underperforming
Even among those who have jobs, the fraction of people working part-time but who would like to work more hours is higher than the historical average.
Walter Energy’s Path to Bankruptcy: The Beginning
Western Coal acquisition As we discussed in the previous part, Walter Energy traded under a dollar for more than a quarter until trading was suspended on the NYSE on July 8. The seeds of the fall were sowed back in 2011. Walter Energy filed for Chapter 11 bankruptcy on July 15, 2015. On April 1, […]
Hang Seng and Japanese Indexes Rose despite Faltering Trade
Hong Kong’s Hang Seng Index, which has been under severe pressure this quarter, was the best performing Asian index on June 19 with 2.56% gains. The index recorded its third consecutive gain.
Cloud Peak Energy’s 2Q15 Shipments: Potential Risk Factors
Cloud Peak Energy (CLD) shipped 16.0 million tons of coal from its three owned and operated mines in the Powder River Basin (or PRB) in 2Q15.
Hang Seng Falls with Chinese Indexes, Nikkei Gains
Hang Seng falls Hong Kong’s Hang Seng Index fell in early trading and didn’t recover until the end of the trading day. The index dropped 1.16%, or 329 points, to end the day at 27,946.46, near the day’s low. On May 16, the iShares MSCI Hong Kong ETF (EWH) gained 0.28% in trading on the […]
Coal under Pressure as Natural Gas Prices Fall Again
Natural gas prices ended the September 4 week in red. Low natural gas prices have eaten away market share from coal in electricity generation.
Grexit Worries Pull Down Utilities and Broader Markets
On June 26, Greek Prime Minister Alexis Tsipras called for a July 5 referendum to decide whether Greeks want to accept the creditors’ terms.
Overview: Ambre Energy—a coal and oil shale export company
Ambre Energy was founded in June 2005. It’s an Australian-American coal and oil shale company. The company’s Australian headquarters are located at Brisbane. The head American office is located at Salt Lake City, Utah. The company operates in three business lines—U.S. coal export infrastructure, international coal marketing and trading, and U.S. thermal coal production.
Germany’s DAX Surged as the S&P 500 Fell Today
Germany’s trade balance increased to $20 billion in March compared to $18.7 billion in February.
Why Natural Gas Dented Arch Coal’s Appalachia Segment in 3Q15
Arch Coal’s Appalachia segment shipped 3 million tons of coal in 3Q15, down from 3.6 million tons in 3Q14, including 1.6 million tons of metallurgical coal.
Only 2 Power Utilities Gain during a Tough Week for the Sector
The power utilities sector remained under stress last week. The representative of the sector, the Utilities Select Sector SPDR (XLU), dropped by 4.1%.
Key Update: Supreme Court Hands Rare Victory to Coal on MATS
In a landmark 5–4 ruling on June 29, the Supreme Court ruled that the EPA unreasonably interpreted the Clean Air Act in writing the original form of its 2012 Mercury and Air Toxic Standards.
Coal Prices in All Major Regions Remain Steady
For the week ending September 4, Powder River Basin spot coal prices averaged $10.7 per ton—$0.17 higher than the price for the week ending August 28.
What Do Rising Crude Oil Prices Mean for Coal?
Crude oil prices rose for the second straight week, albeit at a slower pace. When crude oil production rises, there are fewer railcars available to transport coal.
Walter Energy Is Preparing for Chapter 11 Bankruptcy
On July 15, Walter Energy filed for Chapter 11 bankruptcy. This passes control over the company to its senior creditors. Junior debt holders will have to let go of their claims.
Why has Brazil’s growth slowed in recent years?
Brazil, a $2.5 trillion economy, is the seventh largest economy in the world. Brazil exports commodities such as iron ore, cotton, and coffee.
Hang Seng Ends Flat after Protests and Nikkei 225 Slides Again
Hong Kong’s Hang Seng Index opened lower today and fell sharply in early trade in response to the political situation in the city. As life started getting back to normal in Hong Kong, the bulls returned and the index maintained upward momentum. The Hang Seng closed almost flat at the end of the session.
Why Coal and Power Indicators Matter for Long-Term Investing
Why are we combining thermal coal and power indicators? Thermal coal is mostly used for electricity generation.
Analyzing Arch Coal’s Powder River Basin Cost Drops in 3Q15
In 3Q15, Arch Coal’s PRB operating cost per ton came in substantially lower, at $11.71 per ton compared to $12.42 in 3Q14.
Must-know: The EPA helped a coal producing region
The Illinois Basin produced ~120 million tons of coal during the 12 months ending September 13, 2014. This was ~65% of the interior region’s total production of 185 million tons during the same period. With estimates reserves of ~50 billion tons, the basin ranks second only to the gigantic PRB.
Tracking thermal coal indicators makes good investment sense
Currently, the thermal coal industry is experiencing heightened volatility. As a result, it makes even more sense for us to cover the short-term indicators.
What the Dip in Natural Gas Inventory Means for Coal
A lower-than-expected natural gas inventory indicates a lower-than-expected supply, which means a higher-than-expected demand—and boosts natural gas prices.
Must-know: China’s additions to its power generation capacity
China’s installed capacity has grown 10.8% every year over the last decade. It adds 80–90 GW every year—this is equal to the United Kingdom’s entire installed capacity.
Trina Solar and Canadian Solar See Gains on April 21
The Guggenheim Solar ETF (TAN) gained 0.9% on April 21. American solar stocks account for 47% of the fund’s holdings, and Chinese solar stocks account for another 44%.
Brookfield Renewable Energy: Biggest Yieldco by Asset Base
With over 6,700 MW of hydro and wind capacity under operation, Brookfield Renewable Energy Partners (BEP) dwarfs all other yieldcos we’ve looked at.
Utilities Come under Pressure as September Fed Meeting Nears
All 40 utilities we track saw a fall in their stock prices during the week ending September 4. The broad-based SPDR S&P 500 ETF (SPY) lost a whopping 3.5% during the week.
SunEdison or FirstSolar? Diversification or a Strong Focus?
FirstSolar (FSLR) nailed its 2Q15 earnings. The company’s focus on solar power differentiates it from SunEdison (SUNE).
Crude Oil Drops as OPEC Fails to Cap Production—But It’s Still All Eyes on Coal
WTI crude oil prices closed at $35.62 per MMBtu on December 11, compared to the closing price of $39.97 per barrel on December 4.
After Walter Energy, NYSE Stops Alpha Natural Resources Trading
On July 16, the NYSE announced that it suspended trading of Alpha Natural Resources’ (ANRZ) common stock with immediate effect.
Could Arch Coal’s Debt Lead the Company to Bankruptcy?
Most American coal producers are building liquidity through various means to make sure they survive the downturn and avoid bankruptcy.
US Electricity Generation Remains Steady, But Will Coal Producers?
The latest EEI report for the week ending January 15, shows that US electricity generation jumped to 79.7 million MWh from 79.2 million MWh the week before.
Solar Stocks and ETFs Drop Following EU Decision
The European Union decided to review a minimum import price agreement for Chinese solar panels, pulling the solar stocks down.
Opportunities and threats for coal producers in the Illinois Basin
Transporting high sulfur coal over long distances adds to pollution. Since the EPA waged a war on coal, it probably won’t allow ILB coal to be transported to other parts of the U.S.—even if it makes economic sense. Sulfur can be removed by coal washing, but it would add to the cost. Powder River Basin (or PRB) coal is much cheaper than ILB coal. This blocks ILB’s passage west of Mississippi. This will confine ILB coal’s use to the Midwest.
Natural Gas Prices Rise Marginally—But Not Enough to Boost Coal
Henry Hub benchmark natural gas prices came in at $2.22 per MMBtu on January 22, 2016. This compares to $2.18 per MMBtu on January 15, 2016.
Westmoreland Coal Company is up 83% while other coal stocks suffer
One thing that drew our attention towards WLB is its stock market performance. While stocks of other coal producers are down substantially since the start of the year, WLB is up 83%.