I have one question that I can't shake out of my mind. HCC exports almost all of its coal, relative to the other met coal producers which have a large domestic customer base. So HCC is heavily dependent on friendly export markets. If Trump imposes tariffs on goods coming in to the US, other countries are likely to reciprocate by imposing tariffs on US exports. How might this impact HCC relative to the other players?
I kind of doubt US coking coal would likely be a retaliatory target...would only serve to increase steelmaking costs in EU/China/Insert Country Here at a time when margins are already slim. And given the reason the seaborne market exists is because there isn't sufficient replacement material available domestically, I also doubt it would affect HCC all that much even if such a thing were to actually happen.
Great AMA gentlemen. That question about which competitor should be taken out back and shot sounds like one that Buffet would ask (or perhaps one of his disciples). Do you think we will see more smart money and institutional money flow into US coal equities if Trump’s presidency alters the institutional ESG zeitgeist?
Lol that question was hilarious, and it garnered a bunch of hilarious responses 🤣
As to your election question, funds and large family offices have already been interested and active for some time at this point in this cycle. They weren’t politically concerned before, so they certainly aren’t now.
Not sure if we will see a full-fledged return of more traditional banking to the sector in the US, however…those drivers tend to be global more so than regional.
Thanks Matt. I have another strange question - if ARCH and CEIX intend to merge in a few months, and if you were long both, would there be any reason you can think of to sell out of ARCH and add to Consol, rather than wait for the deal to close? Any risks you can point to in holding the ARCH stock till the deal is consummated?
I can answer this one for Matt, because I've been thinking about the same question. One of the few reasons to trade ARCH for CEIX is if you think the merger won't go through, but I think that's a pretty low probability. I'd probably only decide to trade out of ARCH if I want to take profits and reset my cost basis in the trade. ARCH is trading right in line with the agreed share transfer price in the merger: 1.326 CEIX shares. Now if ARCH were standalone, that would be a very different story after their tough Q3. Also, for fun, I looked at when ARCH/CEIX announced the deal in late August - ARCH stock had been sliding for a while and would probably have slid some more, but the company locked in a pretty good ratio of CEIX shares...
I have one question that I can't shake out of my mind. HCC exports almost all of its coal, relative to the other met coal producers which have a large domestic customer base. So HCC is heavily dependent on friendly export markets. If Trump imposes tariffs on goods coming in to the US, other countries are likely to reciprocate by imposing tariffs on US exports. How might this impact HCC relative to the other players?
I kind of doubt US coking coal would likely be a retaliatory target...would only serve to increase steelmaking costs in EU/China/Insert Country Here at a time when margins are already slim. And given the reason the seaborne market exists is because there isn't sufficient replacement material available domestically, I also doubt it would affect HCC all that much even if such a thing were to actually happen.
The only question we wanna know is Wen Moon?
Fantastic addition guys, much appreciated
Nice work Matt and Joe.. looking forward to your series on the Aussies!
$BTU rising the last few weeks, thank you very much metallurgical coal.
Great AMA gentlemen. That question about which competitor should be taken out back and shot sounds like one that Buffet would ask (or perhaps one of his disciples). Do you think we will see more smart money and institutional money flow into US coal equities if Trump’s presidency alters the institutional ESG zeitgeist?
Lol that question was hilarious, and it garnered a bunch of hilarious responses 🤣
As to your election question, funds and large family offices have already been interested and active for some time at this point in this cycle. They weren’t politically concerned before, so they certainly aren’t now.
Not sure if we will see a full-fledged return of more traditional banking to the sector in the US, however…those drivers tend to be global more so than regional.
Thanks Matt. I have another strange question - if ARCH and CEIX intend to merge in a few months, and if you were long both, would there be any reason you can think of to sell out of ARCH and add to Consol, rather than wait for the deal to close? Any risks you can point to in holding the ARCH stock till the deal is consummated?
I can answer this one for Matt, because I've been thinking about the same question. One of the few reasons to trade ARCH for CEIX is if you think the merger won't go through, but I think that's a pretty low probability. I'd probably only decide to trade out of ARCH if I want to take profits and reset my cost basis in the trade. ARCH is trading right in line with the agreed share transfer price in the merger: 1.326 CEIX shares. Now if ARCH were standalone, that would be a very different story after their tough Q3. Also, for fun, I looked at when ARCH/CEIX announced the deal in late August - ARCH stock had been sliding for a while and would probably have slid some more, but the company locked in a pretty good ratio of CEIX shares...
This is a fantastic initiative and I’m excited to see its continued success.
Amazing ! Thank you guys !
Good stuff, really great info, thanks for the additional content!