NEW YORK (AP) — Shares of coal mining companies tumbled Monday as inventories continued to build with weaker demand in the slowing global economy.
In afternoon trading, Alpha Natural Resources slid the most, down nearly 14 percent to an all-time low. The coal industry has been battered this year as utilities switch to cheap natural gas from coal to generate electricity.
Natural gas prices are low because of huge supplies resulting from widespread drilling in the nation's shale deposits and soft demand for gas in the mild winter across much of the nation.
The International Monetary Fund lowered its outlook on Monday for global growth over the next two years. It also warned that Europe's financial crisis and a potential budget crisis in the U.S. could slow world economic growth even more.
That was not good news for coal producers who hope to offset falling U.S. demand with more shipments overseas. Prices for thermal coal used by power plants recently reached the lowest levels in two years as inventories have grown, Bank of America Merrill Lynch analysts said Monday.
They suggested that mining companies should continue to cut back production and delay or cancel expansion plans.
"Although such output curtailments will provide support to prices, it will take time and discipline to work through the glut," the analysts wrote in a research note. Some U.S. coal companies already have taken steps to cut production.
For example, Patriot Coal Corp. last week filed for Chapter 11 bankruptcy protection to reorganize. Arch Coal Inc., Consol Energy Inc. and Alpha Natural Resources have announced plans to close or curtail operations.
BMO Capital Market analyst Meredith Bandy lowered ratings Monday on Alpha Natural Resources and Arch Coal, citing relatively high debt levels, deteriorating margins and weak demand for Appalachian coal. Alpha Natural's rating was lowered to "Underperform" from "Outperform."
Arch Coal was lowered to "Underperform" from "Market Perform." In afternoon trading, shares of Alpha Natural Resources fell $1.04, or 13.6percent, to $6.59, an all-time low.
Arch Coal dropped 43 cents, or 7 percent, to $5.71. Shares of Consol Energy fell $1.25, or 4 percent, to $30.41 and Peabody Energy dropped 55 cents, or 2.5 percent, to $21.94.
yahoo.com
In afternoon trading, Alpha Natural Resources slid the most, down nearly 14 percent to an all-time low. The coal industry has been battered this year as utilities switch to cheap natural gas from coal to generate electricity.
Natural gas prices are low because of huge supplies resulting from widespread drilling in the nation's shale deposits and soft demand for gas in the mild winter across much of the nation.
The International Monetary Fund lowered its outlook on Monday for global growth over the next two years. It also warned that Europe's financial crisis and a potential budget crisis in the U.S. could slow world economic growth even more.
That was not good news for coal producers who hope to offset falling U.S. demand with more shipments overseas. Prices for thermal coal used by power plants recently reached the lowest levels in two years as inventories have grown, Bank of America Merrill Lynch analysts said Monday.
They suggested that mining companies should continue to cut back production and delay or cancel expansion plans.
"Although such output curtailments will provide support to prices, it will take time and discipline to work through the glut," the analysts wrote in a research note. Some U.S. coal companies already have taken steps to cut production.
For example, Patriot Coal Corp. last week filed for Chapter 11 bankruptcy protection to reorganize. Arch Coal Inc., Consol Energy Inc. and Alpha Natural Resources have announced plans to close or curtail operations.
BMO Capital Market analyst Meredith Bandy lowered ratings Monday on Alpha Natural Resources and Arch Coal, citing relatively high debt levels, deteriorating margins and weak demand for Appalachian coal. Alpha Natural's rating was lowered to "Underperform" from "Outperform."
Arch Coal was lowered to "Underperform" from "Market Perform." In afternoon trading, shares of Alpha Natural Resources fell $1.04, or 13.6percent, to $6.59, an all-time low.
Arch Coal dropped 43 cents, or 7 percent, to $5.71. Shares of Consol Energy fell $1.25, or 4 percent, to $30.41 and Peabody Energy dropped 55 cents, or 2.5 percent, to $21.94.
yahoo.com
No comments:
Post a Comment