Mineweb - ENERGY - Citigroup recommends investors get out of coal, downgrades major coal miners: "Citigroup Global Markets Equity Research mining analysts John H. Hill and Graham Wark declared, 'Our sense is that coal has missed a critical time window, which potentially throws any recovery out-of-phase, with implications that could last for a year or more.'
The duo also suggested that '2Q earnings are likely to be grim, featuring Midwest weather impacts on rail shipments, diesel/steel input escalation, new legal/regulatory mandates, stalled spot pricing, and precious little in the way of new 2008 contracts.'
Forecasting that presidential politics 'are likely to turn progressively more bestial for coal, Citigroup noted that political candidates 'are already stepping up to ‘ban coal.''
Hill and Wark declared that the 'U.S. coal industry badly needs: 1) Consolidation in the East, and 2) Production cuts in the PRB to reverse the capital-destroying paradigm that has caused miners to sit-out the four-year commodity Supercycle. The commodity remains abundant (lacking the scarcity of nickel, copper, or moly) and the miners are fragmented, while the rails and utilities are more consolidated.'
The analysts forecast that company margins and earnings are likely to remain under pressure from '1) Darwinist imperatives to cut production, particularly from the PRB"
July 20, 2007
This is an interesting quote: "Forecasting that presidential politics 'are likely to turn progressively more bestial for coal, Citigroup noted that political candidates 'are already stepping up to ‘ban coal.''"