NEW YORK (AP) ? Shares of U.S. coal companies surged Friday after an analyst predicted a slow improvement in demand because of programs designed to improve economic growth in the U.S., Europe and China.
The stimulus measures, combined with production cuts and a forecast for a colder winter, should help balance the coal market, Sterne Agee analyst Michael S. Dudas stated. He predicted a cyclical recovery in 2013 and 2014.
The coal industry has been battered by anemic demand this year for both thermal coal, which is used to generate electricity, and metallurgical coal, which is used in steel manufacturing. Many utilities and some manufacturers switched from coal to cheaper natural gas for fuel to generate power. And the steel industry bought less coal because of weaker demand. In response, coal companies cut back on production and idled mines.
In recent weeks, the U.S., Europe and China have announced steps to try to re-energize their sluggish economies. That could help improve demand for raw materials, such as coal, if manufacturing production picks up.
In a research note, Dudas said he expects thermal coal demand to decline by about 130 million tons this year, with a modest recovery in 2013 and about 2 percent growth in coal consumption by 2014.
He lowered his 2012 average benchmark metallurgical coal price to $209 per ton from $225 per ton and the 2013 estimate to $215 per ton from $240 per ton. He also set an initial price estimate for 2014 at $225 per ton.
In afternoon trading, shares of Arch Coal Inc. rose 59 cents, or 8 percent, to $7.98; Alpha Natural Resources Inc. rose 67 cents, or 8.1 percent, to $8.89; Peabody Energy Corp. gained $1.04, or 4.2 percent, to $25.88; Consol Energy Inc. increased 41 cents, or 1.2 percent, to $32.91; James River Coal Co. gained 27 cents, or 8.5 percent, to $3.43 and Walter Energy Inc. increased $2.14, or 4.8 percent, to $38.88.
Source: http://news.yahoo.com/sector-snap-recovery-predicted-coal-producers-164639765--finance.html
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