September 7, 2012
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of coal miners were all up big today on bullish news out of China. Cliffs Natural Resources (NYSE: CLF ) , Alpha Natural Resources (NYSE: ANR ) , Peabody Energy (NYSE: BTU ) , and Arch Coal (NYSE: ACI ) all rose more than 10% during trading today.
So what: The big news of the day is that China approved a $156 billion infrastructure plan that will boost demand for metallurgical steel. Most of the projects are steel-intensive, and China is one of the major trading partners of the coal industry.
Arch Coal also said it's reducing its capital spending on thermal mines and will proceed with metallurgical mine projects.
Now what: The news out of China is big, but I wouldn't call a recovery for coal stocks yet. Metallurgical coal may rebound, but thermal coal is still a drag on these stocks, and most are posting losses each quarter. Until that situation turns around, I would steer clear of a big bet in coal.
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