Friday, March 5, 2010

Japan Paying $200/mt for Coking Coal?

Amazing report if its true. Looks like Japan is having to pay up get assets such as coking coal used to make steel away from the grips of China. Alpha Natural Resources (ANR) is likely our best play with their decent supply of coking coal. Puda Coal (PUDA) is a great speculative play in China. More to come on that stock.

This is the difference between coal and natural gas. China needs coal. China doesn't need natural gas.

  • JFE Holdings Inc. reportedly agreed to pay $200 per ton for coking coal in a three-month deal with Australian coal miner BHP Billiton Ltd.
  • The amount was higher than expected, said William Burns, an analyst with Johnson Rice & Co. Burns, who expected JFE and other companies to pay only about $150 per ton, said this shows how aggressive countries have become in competing with China for natural resources.
  • "China has become a black hole, and the Japanese steel makers are trying to lock up their supply," Burns said.

3 comments:

TraderMark said...

I saw that too. Talk about a strange situation - especially with China backing off on coal. Or so I thought.

Monster day on PUDA today - I wonder if the SCOK halo effect hit it.

Stonefoxcapital said...

It was part the halo, but also the fact that management gave a presentation on Thursday where they confirmed 2010 guidance of 1.1 to 1.50. They also provided some info on the other 6 mines they plan to consolidate so that was most likely the catalyst. It does seem like 1999 with the dotcoms but these companies actually have real earnings and valuable assets. Heck PUDA is buying these mines at 2x EBITDA. That is a major reason that the stock is soaring. Doubt its done.

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