This article was originally published by Seeking Alpha on Sep. 26
By Sarfaraz A. Khan
Summary: Peabody Energy has recently increased the
guidance of its Q3 EBITDA but latest data points towards deterioration in
metallurgical and thermal coal prices. The latest data confirms my opinion that
a meaningful recovery in coal prices is a distant dream. As anticipated in the
original article, weak economic numbers from China continue to hit coal prices
and Peabody Energy's shares.
Earlier this
week, the struggling coal miner Peabody Energy raised the guidance
for its third quarter adjusted EBITDA from $140 million - $190 million to $190
million - $210 million. The improvement was driven by the company's cost
reduction measures and improved performance from the Western U.S. and
Australian metallurgical, or steel making, coal mines. Additionally, the
company has lowered its adjusted diluted EPS estimates from a loss of between
$0.40 and $0.53 per share to a loss of between $0.63 and $0.69 per share,
mainly due to a non-cash tax expense.
On the other
hand, the quarterly benchmark for metallurgical coal has touched 6-year lows,
as reported by Bloomberg. Japanese steel mills have agreed to purchase coal
from Australian producers for $119 per metric ton in the fourth quarter, down
from $120 per metric ton in the second quarter. Additionally, analysts at Cowen
& Co, which previously predicted worsening prices in the fourth quarter as
mentioned in the original article, have now said that metallurgical coal prices
could continue sliding through 2015.
As for
thermal coal, Carbon Tracker Initiative has said in a research report released …
read full article at Seeking Alpha.
