The Downward Spiral of the Coal Market
24 Nov 2016

The Downward Spiral of the Coal Market

Now that Trump has won presidency, it is time to fulfill the promises he made. The nation is eager, the world is waiting too, and if only for their money, the investors of several markets out there are keen. The coal market is especially eager. We all remember how Trump focused his entire campaign in the coal market.

Miners had complained to him of how they had been neglected in the Obama government, and in return for their votes, Trump promised major changes. He is president now, but what does this mean for traders who trade stocks in coal? Will Trump keep his word or will the coal market continue to be just as neglected as it was in the Obama administration?

There are many struggling sectors in the American economy; energy is one of them. The coal industry has been brought down by environmental sustainability programmes that resulted in the shutting down of manufacturing plants that supported the coal market. Yet this product is still being mined, and in bulk. Stock traders have a real chance of making money in this industry.

The biggest crushing factor of the coal industry in the market economy is impact to the environment. Natural gas, for instance, is cheaper and a cleaner source of energy. It has made coal almost obsolete. In the Trump administration, natural gas is bound to gain even more market popularity.

The government is looking to loosen up the current restrictions on pipeline building and gas exploration. This will allow more natural gas into the market, hence more stock trading opportunities for investors. Despite these theoretical outlooks, the coal market has seen consistent decreases in prices for several years now. The price of the cheaper, more lucrative natural gas has fallen even lower. Can Trump really turn this around like he promised in his campaign? Experts on the energy industry do not think it is possible.

The days of coal as we know them might be over. Trump might release some of the environmental sustainability pressure on the coal traders, but that is all he can do. The demand in coal will likely never go back to what it used to be. Stocks in the coal market will in turn lose their value quickly. The availability of cheap natural gas will only continue to taint the coal’s market shares. There are other lucrative stocks to trade in; therefore, stock brokers in companies like CMC Markets should think about advising their clients to think of new assets to trade in.

There might just be an overload of natural gas as in the United States. For this reason, gas prices will only remain low, never rising. Most businesses in the coal industry know that the market is frowning upon shares in coal right now, and in the upcoming future. They are, therefore, hesitant to comment on the effect that the Trump administration will have on the coal industry.

The workers, and investors in the coal stock trading alike, are gaining false hopes on account of Trump’s promises. There are high expectations on the stock, yet the reality of it is that coal has hit its ultimate block. The viability of coal in the long term, for any market, will be ensured if businesses have tax incentives to promote environmental sustainability.

The jobs in the coal industry are reducing due to automation of the mining process. A while back, the exports of coal alone made up for 8 percent of the American production industry. Experts hoped that coal would continue to grow its market, but given the slow economic growth and the pollution factors, the mineral has been depressed.

Investors in this market have pulled back their investments. International banks like the Bank of America and JP Morgan Chase Bank have also withdrawn their funding from the coal industry. There is doubt that Trump will change all of this.

The best investors can expect is an unwound Clean Power Plan that was designed to completely phase out the use of coal as a natural source of energy. There are some types of coal that are still selling a lot of stocks, but generally, the coal industry needs stock traders to trade as carefully as ever.