By David Urani
On Friday morning we pointed out rail company Wabtec (NYSE:WAB) and its growing international success. Well, another rail company caught my eye Friday as Genesee & Wyoming railroad (NYSE:GWR) posted its monthly traffic. This is already a known trend in the industry, but it goes to show the magnitude of what has been happening: Genesee's March traffic was down 13.6% from a year ago to 77,046 carloads. The reason for the shift? A 42.7% decrease in coal volumes. With a surplus of shale gas (the President seems to think we have a 100 year supply) recently that's taken natural gas prices down below $2 for the first time since 2002, the shift away from coal and into natgas, largely for power generation, has been quick. Add to that coal's stigma as a "dirty" resource and the EPA's crackdown on construction of new coal plants, and we may be seeing the reinvention of an industry right before our eyes.
It makes me think about the "other" gas, which at more than $4.00 currently could start to face some legitimate competition from natural gas if the auto market and natgas entrepreneurs like T. Boone Pickens (see: CLNE) make a concerted effort. For me, it only makes sense.
And speaking of coal, a number of stocks in the sector like BTU, CNX and ANR look like they can retest lows as the sector ails from not only the aforementioned factors, but also the prospect of less usage from China (see China's Q1 GDP deceleration). Credit Suisse on Friday lowered its forecast for thermal coal prices by 10% for both this year and next.