"Tracking coal over time it is a little different. It is like a consumer staple - Doesnt matter if you dont need more ore for steel people still need lights and and a heater"
In my opinion that statement is not quite correct. The coal price is determined by supply and demand like all other minerals.
A slow down in china, or a weakening in demand for metals will have a very real impact on the price of coal. Industry is a very big user of power, if you took its demand away coal prices will drop, just look at the GFC.
The latent demand of electricity from home user's is not enough to sustain coal prices.
The flipside of this is that rapid growth in china & india is whats predicted to cause a spike in coal prices over the next few years.
I would not be quite as quick as other posters to discount the risks of a slowdown in china or europe, there is always definitely a chance. I personally consider it a risk with a low/medium chance of happening, with big consequences if it does happen.
One thing is for sure, don't think coal is recession proof.
Add to My Watchlist
What is My Watchlist?