1st quaterly report, page-16

Why have coal prices come down so much while Oil and gas prices rise??

This is my take.....

-A few years ago the price of coal was flying and coal prices kept going higher and higher...
-Most coal miners wanted to take advantage of these high prices so they pushed to increase production and bring more of their mines in production?
-Even some previously uneconomic deposits became economic due to high coal prices?
-So the supply suddenly shot up due to all these factors and this has put pressure on the price of coal? More supply than demand?

Another factor IMO is due to the weaker US Dollar during the GFC.
-This made some US coal producers economic so they too decided to increase production and export coal...
-Even more supply...

what next IMO....

Price has dropped mostly due to too much supply in the market due partly to factors above?
Supply/demand has big effect on price?
More demand higher prices. less demand lower prices?

-US Dollar has strengthened so this is going to put pressure on 'some' US coal exporters?
-many of the new producers will now be experiencing big losses due to the lower coal prices?
-I assume many have transport/export agreements in place so they can't just stop production when the coal price drops below break even?
-The producers who can reduce production of their unprofitable mines will most likely reduce production to prevent unnecessary losses?

Bottom line- This is a cycle and it will stabilize. The high cost producers will soon slow and coal supply will soon slow to normal volume...

This slowing supply will support higher coal prices.
Low cost producers are in a great position LT IMO
Asian demand for coal is still growing and most of the cheap easy to access coal has already been mined.

I am bullish coal for the next 20-30 years. bring on the ALDP/S7 news please, this is all that's holding us back IMO.
Lower Aus $ could be here to stay and that good for commodity exporters from Australia.
We have the brown coal, lets turn it into dollars...:-0)


sorry for the ramble