Fri, Apr. 10, 9:12 AM
Tue, Mar. 17, 12:59 PM
- The outlook for U.S. coal producers is "increasingly bleak," and the sector is likely to undergo a wave of bankruptcies, Macquarie Research warns as it forecasts U.S. coal prices (NYSEARCA:KOL) will no longer move in conjunction with international coal prices.
- The decoupling, which will feature declines in U.S. coal prices, will be a "necessary step to force rationalization on U.S. producers" but also likely will result in production cuts and bankruptcies, says analyst Anthony Young.
- Peabody Energy (BTU +4.8%) recently had to pay a 10% interest rate on bonds it issued, which Young says bodes badly for other coal producers, making it harder to refinance debt and leading to cuts and liquidity squeezes.
- Macquarie lowers its stock price targets on Alpha Natural (ANR -4.2%) to $0.60 from $1.15, on Arch Coal (ACI -1.9%) to $0.90 from $1.25, on BTU to $5.30 from $6.40, and on Consol (CNX -0.1%) to $29.50 from $31.50.
Thu, Feb. 26, 2:45 PM
- J.P. Morgan analysts see some encouraging signs for coal (NYSEARCA:KOL), which would be good news for companies such as Peabody Energy (BTU -5.7%), Cloud Peak Energy (CLD -5%), Alliance Resource Partners (ARLP +0.9%) and Foresight Energy (FELP -1.2%).
- Coal equities have bounced off lows, the JPM crew says, which meshes with its belief that the greater financial challenges faced by oil and gas E&Ps should reduce natural gas supply and help coal prices later this year and into 2016.
- JPM has Overweight ratings on the two MLP coal miners ARLP and FELP, which it expects to benefit as the gas market tightens in 2016 and with the added attraction of yield in a yield-starved world; BTU and CLD enjoy stronger balance sheets, which should see the companies through what could still be a sloppy coal market in 2015.
- Alpha Natural Resources (ANR -6.9%) and Arch Coal (ACI -4.3%), however, acquired so much debt that their equity effectively has become primarily an “option" on fluctuations in the coal market, the analysts say.
Thu, Feb. 12, 10:58 AM
- Alpha Natural Resources (ANR +9.1%) is sharply higher after reporting a smaller than expected Q4 loss on a 2% drop in revenues to $1.07B, which also topped expectations.
- The decrease in coal revenues was attributable to lower average realizations in all regions; adjusted cost of sales for ANR's eastern mines, spanning the Appalachian region in Pennsylvania, West Virginia and Kentucky, fell to $57.55/ton from $66.97 a year earlier.
- ANR is cutting its 2015 capex outlook to $225M-$275M from $275M-$350M.
- During Q4, ANR's metallurgical coal shipments totaled 4.9M tons, vs. 4.4M tons in the year-ago quarter and 4.8M tons in Q3 2014.
- For 2015, ANR expects to ship 69M-80M tons, including 14M-17M tons of eastern met coal, 19M-23M tons of eastern steam coal, and 36M-40M tons of western steam coal.
Thu, Feb. 12, 9:15 AM| 5 Comments
Tue, Feb. 3, 10:46 AM
- Arch Coal (ACI +8.9%) opens sharply higher after reporting a smaller than expected Q4 loss as it cut costs to $16.46/ton from $18.10/ton in the prior-year quarter.
- ACI says it is suspending its annual dividend to preserve current levels of liquidity, although Cowen analysts say the suspension will save only ~$2M/year.
- ACI says it had available liquidity of ~$1.2B at year-end 2014.
- Expects costs in the Powder River Basin and Appalachian region, which account for most of its coal production, to fall in 2015, reflecting an improved rail performance, the impact of lower diesel prices and a full year of steady production at its low-cost Leer mine in West Virginia.
- ACI also says it expects capital spending of $145M-$160M in 2015, roughly flat vs. 2014's $147M in capex.
- Forecasts FY 2015 coal sales of 130M-143M tons after selling 134.4M tons in 2014 and 35.2M tons in Q4 (+9% Y/Y).
- Other coal names also are higher: ANR +7.8%, BTU +5.6%, CLD +2.3%, WLB +2.6%, WLT +9.4%, CNX +1.7%, RNO +4.3%.
Fri, Jan. 23, 12:46 PM
Thu, Jan. 22, 12:45 PM
Wed, Jan. 14, 12:39 PM
- Citi cuts price targets for iron ore to $58 for 2015 and $62 for 2016, down from its prior estimates of $65 for both years, and lowers its outlook for thermal and met coal.
- Citi warns its downwardly revised forecast means it now expects earnings for major mining companies will fall by 9%-21% for 2015 and by 3%-16% in 2016.
- Rio Tinto (RIO -2.5%) is the exception, as Citi sees earnings rising 7.1% this year and 10.6% next year due to the company’s greater exposure to the weaker Australian dollar.
- The firm cuts its price target for Glencore (OTCPK:GLCNF -7.2%) by 8% to £3.60 from £3.90 and sees earnings falling 21% and 16% respectively in 2015 and 2016.
- Citi says it is still bullish on the sector, but warns that metals and mining companies will only slowly grind higher over the next few years.
- Also: BHP -4.5%, VALE -5%, FCX -12%, SCCO -4.9%, TCK -9.7%, CLF -4.4%, CENX -9.1%, MT -4.2%, X -4.9%, NUE -3.4%, STLD -2.6%, BTU -9.8%, ANR -8.8%, ACI -8.9%.
Dec. 30, 2014, 5:01 PM
- Alpha Natural (NYSE:ANR) has closed the sale of its Amfire Mining Co. subsidiary to Rosebud Mining for $86M - $75M in cash + the assumption of liabilities. Amfire owns ten mines and four preparation plants/loadouts located in seven Pennsylvania counties.
- Alpha still owns two mines in Southwestern Pennsyvania. The company had $1.2B in cash/short-term investments at the end of September, and $3.9B in debt.
- Shares rose 5.9% in regular trading.
Dec. 29, 2014, 10:26 AM
- Pummeled this year thanks to slumping coal prices, a general rout in commodities names, and (in some cases) bankruptcy fears, coal stocks are seeing bargain-hunters emerge on a quiet late-December trading day.
- Gainers: CLF +8.2%. WLT +4.6%. ACI +3.3%. BTU +2.1%. ANR +3.8%.
- On SA, Equity Watch recently argued more pain is in store for the U.S. coal industry 2015, given the April implementation of MATS regulations, declining thermal coal demand (due to the retiring of coal-fired plants), and an unfavorable global supply/demand balance for metallurgical coal. The author does, however, think rising Asian demand could provide some relief for U.S. firms.
- ETF: KOL
Dec. 2, 2014, 3:35 PM
- Walter Energy (WLT -29.2%) sells off nearly 30% following a note from BB&T Capital predicting the coal company would fall into bankruptcy in 2015.
- BB&T thinks WLT has enough cash to get through 2015 at the current met coal price of $119/metric ton, but believes WLT's board "will reach the conclusion before that point that the met market won't improve enough over the next couple of years to save the company from needing to restructure."
- Most other coal names also are lower: ANR -2.3%, ACI -1.9%, CLD -3.1%, CLF -2.2%, CNX -0.7%, BTU +0.6%.
Nov. 28, 2014, 10:25 AM
- OPEC's Thursday decision to keep oil production unchanged has sparked a commodity stock rout, one that hasn't left coal stocks unscathed.
- Major decliners: BTU -6%. ACI -6.6%. ANR -6.2%. CLD -4.3%. CNX -2.8%. NRP -3.5%. ARLP -3%. CLF -3.6%.
- Thermal coal prices have already fallen sharply this year.
- ETF: KOL
Nov. 20, 2014, 5:42 PM
Nov. 14, 2014, 2:39 PM
- Thermal coal and coal stocks are rallying after Glencore (OTCPK:GLCNF, OTCPK:GLNCY) said it would halt production at its Australian mines for three weeks to try to tackle a global supply glut.
- Deutsche Bank says the move is an important signal from the world’s largest producer of seaborne thermal coal: “Taking 5M tonnes out of the 1.1B [a year] seaborne market is a relatively small starting point, but may mark the start of more to come."
- But other analysts say it is no sure thing that Glencore’s move would be copied by others or lead to permanent mine closures; unlike some rivals, Glencore has less exposure to "take or pay” contacts which oblige miners to pay charges of up to $25/metric ton to use rail and port.
- ACI +10.7%, ANR +10.1%, WLT +5.2%, BTU +4.3%, CLF +3.2%, CLD +2%, CNX +1.9%.
- ETF: KOL
Nov. 6, 2014, 3:35 PM
- “The fundamental case for coal is strengthening but requires several years of patience," and coal miners (NYSEARCA:KOL) still pose too much short-term risk for investors, J.P. Morgan analyst John Bridges says.
- The coal sector is "very much a weather trade" which is sensitive to this winter’s temperatures, Bridges says, "consequently, without another particularly cold winter or a direct cyclonic hit on Australia’s coking coal mines, coal prices and thus the coal equities are likely to remain volatile through the 2014-15 winter."
- In the sector, Bridges recommends Consol Energy (CNX +0.6%), Alliance Resource Partners (ARLP -0.4%) and Foresight Energy (FELP +1.7%), as only high-yielding coal MLPs are resonating with investors.
- Most big coal names are adding to yesterday's gains, as the IEA predicts world coal demand to grow 2.3% in 2015, mostly undaunted by stricter clean air regulations and competition from cheap natural gas: ANR +5.1%, ACI +4.7%, BTU +0.5%, WLT -1.1%, CLD +0.9%.
ANR vs. ETF Alternatives
Alpha Natural Resources Inc along with its subsidiaries is engaged in extracting, processing and marketing steam and metallurgical coal from surface and deep mines, and sells it to electric utilities, steel and coke producers, and industrial customers.
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