----- Forwarded Message ----
From: swan silo <[EMAIL PROTECTED]>
To: [email protected]; [EMAIL PROTECTED]
Sent: Friday, July 4, 2008 10:26:59 AM
Subject: Fw: Coal mining shares tumble
Subject: FW: Coal mining shares tumble
NEW YORK(Reuters) - Stocks in coal mining companies tumbled on Wednesday
aftercoal prices fell in what traders said was a long-awaited correction.
Analysts said the benchmark European price dropped from around $225 per ton to
below $200, which in turn dragged down U.S. prices by as much as $20.
London 's API2 coal swaps plunged by as much as $24, a fall unprecedented in
the past five years of OTC swaps trading. The market experienced a violent
correction with swaps falling sharply minute by minute, traders said.
The correction was long overdue, traders said, because prices have risen
sharply and steadily for the past few weeks. Prices stabilized around $2 below
physical levels at the close in London .
The Dow Jones coal index <.DJUSCL> was down 13.83 percent in New York on
Wednesday afternoon.
"We have been waiting for a correction for months," Calyon Securities coal
industry analyst Gordon Howald said, adding that some U.S. coal company stocks
have risen between 40 percent and 60 percent since May 1.
"It's a correction and not a big deal," he said. "Nothing has changed in the
global coal picture."
Howald said that what prompted Wednesday's correction was the refusal by some
Asian utilities to pay $220 per ton for steam coal, which was selling for $170
last week. "So it corrected down to $200."
Jeremy Sussman, a coal industry analyst with Natixis Bleichroeder, said U.S.
coal producers have been signing contracts "at very good numbers, well into the
triple digits, but the stocks don't reflect that.
"We are telling people now is a good time to buy."
Frederic Ruffy, options strategist at Web information site WhatsTrading.com,
said the whole sector was moving lower on the price correction.
Options were active in Consol Energy <CNX.N>, Arch Coal <ACI.N>, Massey Energy
<MEE.N> and other coal stocks, he said.
Sentiment was mixed but some players were using the decline in the sector as an
opportunity to enter bullish option trades after a long awaited pullback.
"With the price of coal dropping, most of the coal stocks are under major
pressure today," said William Lefkowitz, options strategist at brokerage firm
vFinance
Miners were the top losers in London , with BHP Billiton <BLT.L>, Rio Tinto
<RIO.L> and Anglo American <AAL.L> all falling about 4.4 percent.
On the New York Stock Exchange, Arch Coal closed down 17.2 percent at $62.21,
Consol dropped 14.6 percent to $95.57, Massey fell 18.9 percent to $74.87 and
Peabody Energy <BTU.N> was down 9.3 percent at $77.90.
(Reporting by Steve James in New York; additional reporting by Jackie Cowhig in
London, Doris Frankel in Chicago and Bruce Nichols in Houston; Editing by Gary
Hill)
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