Patersons Securities coal analyst Andrew Harrington told International Longwall News that even with recent falls some of the coal stocks were still outperforming on an annual basis.

“Up until the last couple of days all of them were outperforming on a year rolling basis compared to the market,” Harrington said.

“They were up 20 to 100 per cent when the market over the year has been down around 25 per cent.”

While coal has been immune to market turbulence over the past few months, it has not been strong enough to withstand the battering of a global financial crisis with US and Australian coal company stocks nosediving.

However, Harrington said the market was not seeing the wood through the trees.

“When you look at the Australian coal exporters they have their volumes and prices more or less locked in for most of this financial year and every time the Aussie dollar falls it just means a boost to their top line of revenue,” he said.

These sentiments were backed by Perth-based State One Stockbroking resource analyst Sam Berridge.

“Share price falling has nothing to do with the fundamentals of the company but it is just the currency they are in,” Berridge told ILN.

Berridge said as Australian stocks started to fall in US dollar terms the funds were not worth as much so people had to sell to stop the rot.

“The whole thing has turned into a bit of a spiral,” he said.

“As far as the coal stocks are concerned it is very much USD versus the AUD as to why the fall started and once it started it kept on going.”

Looking forward Berridge said the coal market would climb back up once the market was purged of largely American money.

“All the international money that flooded into Australia and pushed our market so high, a lot of it is going to leave again and it is not going to be an orderly process, it is happening in a big rush,” he said.

“Once that is finished, I think it will rebound quite strongly. As long as they [coal miners] keep making lots of money, which is what they are doing, they will be fine.”

Harrington also gave the outlook for the coal companies which have taken a hammering in terms of earnings as “very good”.

“The share price should reflect that eventually,” Harrington said.

But in a week of slowing demand for iron ore, a steel ingredient, from Australia’s biggest trade partner China, questions have been raised over future demand for coking coal.

Harrington said in normal market conditions he would ignore the calls for a slowdown from China.

“At this time of year the mating season begins and the games start being played with the negotiating positions,” he said.

“There is always some kind of announcement about cutbacks in power stations or steel mills or aluminium smelters – these things are an annual dance.

“This year the market is a lot more sensitive to these types of announcements but I think they should be taken with some grain of salt.”

In thermal coal arenas Berridge was just as confident putting the political will to keep the lights on in countries such as China and India as a driving force for thermal coal demand out of Australia.

“At one stage the Chinese were completing one coal power station per week,” he said.

“You have to keep the lights on so the demand is always going to be there.

“The government is answerable to the voters and the voters want their lights kept. So to keep the people happy the coal generators keep getting built.”

At midday trading today Gloucester Coal was down nearly 10% at $A3.84, while Centennial Coal dropped by nearly 8% at midday trade to $3.17. Centennial had recovered 9.5% yesterday closing at $3.43.