With London equities market wafting in and out of bear market territory on Thursday - a response to the 1.8 per cent drop on the S&P 500 overnight and a 1.46 per cent fall on the Dow - attention turned in the unlikely direction of over-the-counter thermal coal.
After a sharp run up, Wednesday saw a swift correction:
That has triggered heavy selling of big US coal miners, like Alpha Natural resources and Peabody Energy.
While no one has seen such a sudden fall in the price of coal for years, analysts are insisting that this is nothing to worry about. As Gordon Howald of Caylon Securities told Reuters:
We have been waiting for a correction for months…It is a correction and not a big deal…Nothing has changed in the global coal picture.
But that’s not quite what the price is saying.
Jitters seem to have been triggered by reports that Asian steelmakers were refusing to pay latest coal prices - complaining (with some justification, no doubt) that they were not able to pass on inflated costs to their own customers.
Indeed, in the US the head of ArcelorMittal’s local flat-rolled business, Lou Schorsch, was quoted by Bloomberg as saying that about half of his US customers had refused to pay a $250-a-ton surcharge added by ArcelorMittal in May.
That in turn has rattled the mining industry in general — all the big London-listed miners were headed lower on Thursday.
A small yellow bird may just have fallen off its perch.
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