Trader Mark submits:Many coal companies are reporting this week, and how much they beat or did not beat estimates are not the issue at these valuations and after such historic drops in stock prices. The main emphasis now is on future prospects, and the thoughts on 2009 and forward. We see a mixed bag of comments... again my main surprise here is at these valuations a cash rich foreign suitor is not coming in to buy entire companies outright. [Jul 18: Wilbur Ross Believes M&A Activity in Coal Will be Unprecedented in Next 12 Months] With the issues in credit markets it is hard to tell if that is the culprit or foreign companies are just being cautious.
I'm still a long-term bull as I think the US dollar goes back to its multi year trajectory (down) in the future, helping US multinationals (East Coast coal producers for example), and the same foreign markets will continue in their needs. Ironically if the US imposes stricter regulation on coal it could cause some impairment to production, which should be beneficial to pricing. Also a lot of people simply don't want their kids to grow up to be coal miners so labor shortage seem to be quite striking in the industry.
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