IB Net Payout Yields Model

Met Coal Conundrum

Friday was a wild day in the metallurgical (MET) coal sector as Patriot Coal (PCX), Walter Energy (WLT), and Norfolk Southern (NSC) all made noteworthy announcements. With Patriot Coal and fellow met coal producer Alpha Natural Resources (ANR) both sinking more than 10%, one would assume that all of the announcements were negative.

Summary of the announcements from Friday:

  • Before the market opened, Patriot Coal put a major damper on the sector by announcing the closure of several high-cost met coal mines due to slumping demand for seaborne coal.
  • During the day, Norfolk Southern announced the loading of the largest volume cargo in the history of Pier 6 at Lamberts Point.
  • After the market closed, Walter Energy announced a reduction in 2012 production due to equipment and facility issues while announcing the market remains robust. (Walter still expects roughly 19% to 34% production growth for the year)

Naturally the news for Patriot Coal is disastrous for the company. Yet another warning in a year full of missed opportunities to climb the met coal food chain.

Read full article at Seeking Alpha.

Disclosure: Long ANR. Please read the disclaimer page for more details. 


Mark Holder said…
CNX announced on Mon that production was slightly ahead of expectations. The market is much stronger than the initial read off the PCX news would suggest.

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