Episode 19 - Macro Meltdown or Commodity Boom? What’s Driving the Next Coal Cycle

Prices have been pretty good, right?

Yeah, no, it's been okay.

I mean, I'm looking at the PLV met curve here over the past week.

It's actually down a little bit.

It's starting to relax.

You know, it was either right before or right after when last we spoke, there was a mine accident in Shaanxi province in China.

that caused about 150 mines to come offline for inspections, which is similar to another event that we saw a few years back.

Since then, that supply crunch impulse has faded.

The 150 mines has turned into, I think, about 51 today.

But those mines that have come back on are still operating at a reduced capacity.

And also, I mean, there's still 50 mines that are shut.

And Shaanxi province with 1A is where a lot of China's high quality met coal comes from.

So their stockpiles are high at the moment, but they're starting to come down.

And I'm just looking here over the past month, the Dalian coking coal price is up 17%, almost 18%.

on the front month and finally just now starting to relax.

But across the board, it's up pretty significantly.

On the PLV side, we saw, I think, a high of about 248, 249, didn't quite get up to 250.

And the curve is in a very, very slight contango going up to call it 255 by the end of the year and, you know, 265, 270 by the time we get out into 27, which is Commensurate with our theme that $250 is the new $150, the new long-term price of coal, $100 from where we started our careers.

That's kind of the tail of the tape.

We're in a spot where Chinese steel margins are deeply negative.

So we're probably capped on the upside for PLV prices.

We don't expect those to move up a lot more until we see a push up, some kind of cost push inflation in Chinese steel.

And we haven't seen that yet.

India, on the other hand, is going to be back in the market probably sometime in late July or early August to get those first post-monsoon season cargo.

So I think we probably move sideways or relax from here from a pricing standpoint.