Coal news and updates

Walter Energy (WLT) is the leading met coal producer in the U.S. and produces premium quality met coal. As WLT is mainly engaged in met coal operations, its earnings are highly sensitive to met coal prices. Met coal prices in recent times have stayed weak, and I believe oversupplied met coal markets will limit a met coal price recovery in the near term. Last week, the met coal quarterly benchmark price for 1Q2014 settled at $143/ton, its lowest level since 2009. As met coal markets remain oversupplied, I am downgrading WLT from 'buy' to 'hold.' Also, WLT has experienced price appreciation of approximately 50% in the ongoing second half of 2013, which limits any stock price appreciation in the near term.

 

Lower Met Coal Price and oversupplied Markets

Last week, the 1Q2014 met coal benchmark price settled at $143/ton, down from $152/ton for 4Q2013. The 1Q2014 benchmark price remains the lowest since fiscal year 2009's annual settlement price of $129/ton, indicating that met coal markets remain oversupplied. Also, due to excess supply, the met coal spot price continues to drop; last week, the met coal spot price was down $1 to $137/ton. I believe that oversupplied met coal markets will limit any met coal price recovery in the near term.

 

 

 

Source: seekingalpha.com