With widespread cost cutting and commodity prices bottoming out in coal, Peabody CEO Greg Boyce said investors could see that the worst may be over.
In an interview with Bloomberg, the chairman and CEO of Peabody said there had been relatively flat coal pricing for the last nine months.
“All of the investors are encouraged that that represents kind of a bottom to the commodities cycle, but they’re waiting to see what happens in terms of the timing of that uptick,” he said.
The last year has seen significant losses for Peabody, whose share price has halved to $US10 in that period.
Since October 20 their price has fallen 9 per cent, down 56 cents per share.
Boyce said Peabody’s stock dropped as investors hadn’t yet seen evidence that the global oversupply of coal was slowing.
Over the next couple of quarters investors can start looking for signs of a recovery in coal prices, Boyce said.
“There’s going to be a long lag where you’ve got less supply than demand,” he said. “That’s going to have a strong, strong pull for the sector,” he said.
Catalysts to look for are rising Chinese demand and improvements in US railroad capacity for deliveries from mining regions to prevent bottlenecking.
According to Boyce, Peabody will be well positioned when the coal cycle turns, but will not acquire any new assets until a coal price rebound, as current owners will not want to sell at the bottom of the cycle.