Shayne Heffernan Coal Report
Arch thinks U.S. coal consumption for electrical generation could drop by at least 75 million tons this year, so it is paring its total production in the U.S. by 25 million tons over 2012. Arch has eliminated some 500 jobs company-wide since the market’s downturn.
“While we hope that coal markets improve as we progress through 2012, we don’t plan to push tons into an already oversupplied market,” John Drexler, senior vice president and chief financial officer, told analysts during a conference call.
“The U.S. coal industry is in the midst of a restructuring that will cause some players to exit the market and others, like Arch, to pare back operations until market conditions improve,” said John Eaves, Arch president and chief executive. “Such change creates opportunities for our company, which is well-equipped to move tons offshore to serve growing global coal demand.”
Arch Coal, said Tuesday that “severe weakness” in the U.S. market for coal used to generate electricity cut sharply into its first-quarter earnings and forced it to further curtail production for the year.
Arch Coal’s lower earnings were a result of a U.S. market that appears unsettled, at least for now. The mild winter reduced demand for electricity and heating, which helped push down natural gas prices. A number of power plants have switched to gas from coal to generate power, resulting in what Arch called “unprecedented” stockpiles that reduced demand.
Arch idled one dragline, switched another one to reclamation work, and limited loading of rail cars in its Wyoming mines. The company will have three draglines idled before the middle of the year.
It’s not yet clear how the decrease in production cut will affect jobs, said Kim Link, spokeswoman for Arch Coal.
“We’re trying to figure out where we go from here,” she said.
Several players said Chinese demand is set to improve in the near term as stockpiles at ports decline and to a lesser extent due to the approaching monsoon in India, although the weak rupee is having a negative effect.
Chinese buyers are bidding $70-$72/mt for FOB Kalimantan 5,000 kcal/kg GAR material, depending on whether it is loaded on to a gearless or geared vessel, while producers are offering it at $75/mt, an Indonesia-based trader said.
Indonesia’s PT Durga Sakti Coal Energy is offering an end-May loading of 50,000 mt of 4,800 kcal/kg NAR coal, with total maximum sulfur content of 1% on an air-dried basis and ash of 10%, and total moisture of 26% on an as-received basis at $78/mt FOB mother vessel, a trader at the company said.
He said he had seen offers for FOB Kalimantan 5,000 kcal/kg GAR at $76/mt from producers, while Chinese buyers were bidding around $71/mt.
American Estates Management formerly ARCHER ENTMT MDA CMNS (PINK:AEMC) to Add Coal Services Hub in Indonesia ARCHER ENTMT MDA CMNS (PINK:AEMC).
AEMC Executives are visiting Indonesia in May to establish a Coal Services Hub in Kalimantan Indonesia.
The services Hub will provide machinery rental, Coal trading, Coal Storage, International Shipment, Coal Processing and Mining assistance.
The services hub will be in place in time to benefit from a change in Indonesia’s Mining and Export Policies.
The initial investment has been externally funded and there will be no new issue of stock.
Coal mining in Indonesia is growing rapidly and the services sector is under developed, changes in Indonesia’s legislation will force companies to comply and process Coal inside the country.
American Estates Management Company is a Real Estate Company focused on mineral deposits, agricultural land and Governement/Institutional Liaison services.
American Estates Management Company provides mining and mineral processing engineering services; geological and environmental services; marketing, project development, project management, and mineral resource management services.
American Estates Management Company markets mineral and metal products and equity in mineral and metal projects, and partners in the development of mineral assets and metal production facilities. American Estates Management Company have developed business activity in North America, South America and Asia.
ICE Coal Futures volume softened in April, with a total of 75,651 lots (or 75.7 million tonnes of coal) cleared in a trading month shortened by the Easter holidays. This represents a 17% decline on March volume, and the 3rd month-on-month dip since the noteworthy results of January 2012.
A downward trend in daily settlement prices throughout the month resulted in a hike in volatility across all hubs, with the prompt Rotterdam contract losing a full $12/mt by the end of April, closing at $91.15/mt.
Richard Bay and Newcastle experienced similar conditions, seeing a respective $6.85/mt and $9.10/mt contraction in April for theMay’12 contract Despite the slow-down in liquidity open interest continued to climb, reaching a new record level of 137,848 lots on 27 April, a 2% increase on the end of March, and 14% growth on the 2011 close.
ICE Coal Futures Monthly Volume
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Knightsbridge Law is a boutique law firm in Thailand. The lawyers of our firm have provided legal advice on a variety of areas of the legal practice, including:
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Shayne Heffernan oversees the management of funds for institutions and high net worth individuals.
Shayne Heffernan holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reached a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.Read the Terms of Service
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