Wednesday, September 21, 2011

Coal Outlook Burns JOYG; Typhoon Roke Slams Japan

Coals dismal news has played a key role in the fall of Joy global stock in the last two days. The stock was trading at 70.44 (-5.43,-7.16%) at the close. There is much stipulation that companies in the coal market may have to readjust their forecasts. US companies have seen boosted production in the recent months by strong exports in Japan and South Korea, following floods in Queensland which reduced exports to the region from Australia. Japans lack of hope in Nuclear energy has boosted the usage of coal, as well.

Around the Coal Market:
Alpha Natural Resources (ANR), one of the largest coal suppliers to the United States, adjusted their coal shipment expectations for the full year of 2011, to a range of 102.5 million tons to 109.5 million tons. The company had previously forecasted shipments of 104 million tons to 112 million tons. Both lower metallurgical coal* exports and lower output from mines have impacted the outlook. Alpha closed at 22.30(-4.62, -17.16%).

Walter Energy also predicts weaker metallurgical coal activity in their forecast. Walter see’s consolidated net income per share of $1 to $1.16, where analysts were expecting $3.23.

Major railroad companies CSX, Norfolk Southern, and Union Pacific all slid from this report as well. At 2pm, Typhoon Roke slammed Japan and would later be downgraded to a tropical storm. However, the country has been in recovery mode since March following the devastating Tsunami in late February.

With the combined effects of natural disasters and poor coal outlook, there is some speculation regarding the growth of Asia. Analysts feel that the once proclaimed hot Asian steel market is cooling.

*Metallurgical coal is critical in the steelmaking process. The majority of the world’s raw steelmaking capacity is now in Asia.


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