Today we closed our position in Cloud Peak at a loss, due to a piece of information we somehow missed. In mid November the Chinese government lifted restrictions on the number of operating days for coal mines from 273 to 330 days per year. They are also considering easing their restrictions on coal production amount per year by 300 million tons. This represents a drastic change in the global market for Thermal coal – there is almost no room for Cloud Peak to resume exports to the Asian market, the added cost for seaborne coal is just too high ($35 – $45 additional per short ton).
The EIA also published an interesting report today – for the third year in a row the majority of newly constructed electricity capacity is renewable. Of the 25 gigawatts of added capacity 63% has been renewable (last year it was 66%). Of more interest to fuel commodities is the fact that new capacity in fossil fuel generation is at its highest since 2012, and is nearly double what it was last year at about 10 gigawatts. This increase in fossil fuel generation is unusual given that natural gas prices are expected to rise at an increasing pace in the coming years, but is welcome news for the commodities industry.