Episode 21 - The Disconnect Between Robust Commodity Fundamentals and Equity Volatility

I'll start over on the met coal side.

Really not much doing here over the past week or two, really.

Met coal's down about 6% on the month, which is really just reflective of the fact that the mine accident in Shaanxi province in China, the effect of that has kind of faded over the course of the last month and change, right? So they've mostly switched to imported coal for their demand on that.

We've seen the uptick in receipts from both China and Russia.

and uh and as a result uh there's not really not been much uh appetite in the broader market for coal here over the past two weeks so we kind of had almost like a second shoulder season after that uh that initial spike which was pretty interesting uh but uh just looking down through the curve uh we're at 237 dollars per ton for premium low volatile met coal that's down about let's call it one to two percent on the week and we're kind of at the spot where we're gonna I think we might be able, we might head lower.

Chinese steel margins are still deeply negative and India steel prices are starting to roll over.

So we could see the possibility of maybe exploring down to 230 or I think the bottom for that would be 220.

But by then, I think we'll have people start to come back into the market because stockpiles in India are starting to get low.

Monsoon season is in full blast.

And China will need to restock most likely by the time we get to the middle of August.

So I think it's maybe another sleepy month.

But by and large, I think the doldrums are behind us at this point, Joe.

Yeah, that's good.

I think we've been suffering from a little bit of the thermal coal sell-off over Let's see here.

You know, yeah, over the last month, kind of coming down from highs, prices trading down as things seem to normalize a bit in the Strait of Hormuz.

I don't quite know what the right verb is for the situation there.

Yeah, the action on the thermal coal side has been way more interesting, obviously, than what's been going on at Met.

Met has been steady in this mid-$200 range, whereas I'm looking through the specs.

Newcastle's down 14% over the past month, but hasn't gone anywhere in the last week.

It's just down 0.16%.

And then when I look at...

API 2, well, it's down 12% over the last month, but only 4% over the past week.

And the back of the curve is actually up over the past week during that time.

So we're getting some different signals from each of the complexes.

And on the thermal coal side, how are you reading that right now?