Metallurgical coal prices have plunged due to a global oversupply and slowing demand out of China. The collapse has ravaged US coal miners including Walter Energy, Alpha Natural Resources and Arch Coal. All three companies placed big bets on prices remaining high. And all three have filed for bankruptcy in the past year.
Levin said a “significant“ amount of Chinese metallurgical coal is expected to come out of the mar ket because of high costs and the government’s push to close up to 150 million metric tonnes of annual crude-steel production capacity by 2020. If the prices don’t rise, they’ll at least “end up being no worse than flat“, he said.
In calling a potential price gain, Levin also cited Consol Energy’s sale of a mine in Virginia for $420 million. The buyer, Coronado Coal, is backed by Houston-based Energy and Minerals Group. Coronado bought metallurgical coal mines from Cliffs Natural Resources.–Bloomberg