Wed, May 27, 2:56 PM
- A day after Credit Suisse warned that coal miners such as Arch Coal (NYSE:ACI) and Alpha Natural Resources (NYSE:ANR) were in "dire straits," Citigroup analysts say it will be "survival of the fittest" for the world’s coal miners.
- While Citi believes current coal prices are below sustainable long-run levels, it does not expect a return to prices anywhere near the levels seen a few years ago; the firm cuts its long-run thermal coal price forecast to $80/ton from $90 and its met coal price forecast to $125/ton from $170.
- The firm sees China and India as the largest sources of downside risk to its long-run forecasts, particularly for met coal, where China could re-emerge as a net exporter.
- Most coal stocks are extending yesterday's heavy losses: ACI -12.1%, ANR -11.1%, BTU +0.9%, CLD -1.7%, WLB -0.5%, KOL -0.3%.
Tue, May 26, 3:19 PM
- Credit Suisse analysts find little reason to favor coal equities amid a "dire outlook" for the group, initiating Arch Coal (ACI -12.2%) and Alpha Natural Resources (ANR -12.3%) with Underperform ratings and $0.50 share price targets, and Peabody Energy (BTU -5.8%) with a Neutral view and $4.50 target.
- ANR suffers the greatest liquidity risk, the firm says, as negative free cash flow and upcoming debt maturities eat into its existing liquidity position, while ACI fares somewhat better but still is likely to burn through cash for the next several quarters; both companies are limited in their ability to borrow more debt and both face revolver maturities in mid-2016.
- Cloud Peak Energy (CLD -0.9%) - the coal stock “least likely to cause sleepless nights” - is started with an Outperform rating and $11 price target.
- Adding to ACI's woes are Friday's news that the company is in talks with restructuring advisers as it looks to reduce its debt, and the receipt of delisting notice from the NYSE.
- KOL -2.4%.
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.
Tue, Jan. 27, 11:28 AM
- Peabody Energy's (BTU -6.7%) move to slash its quarterly dividend to less than a penny a share is helping push coal company stocks (NYSEARCA:KOL) lower: WLT -1.6%, ACI -1%, CNX -1.8%, CLD -2%, WLB -5.4%, ARLP -1.2%.
- Cowen analysts see the move as "a prudent move amid uncertain coal markets," and Sterne Agee says the dividend cut will save BTU $100M in annual cash payments.
- Citigroup's Brian Hu maintains a Buy rating on BTU, saying that although management expects U.S. thermal coal demand to fall by 50M-60M tons in 2015, "BTU is better insulated due to their heavily contracted position and Y/Y improvement in Southern PRB rail performance.”
Fri, Jan. 16, 4:17 PM
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
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. 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%.
Nov. 5, 2014, 12:24 PM
- Coal stocks (NYSEARCA:KOL) are rallying in the hope that the new balance of power in D.C. can at least halt what the companies view as an attack on their livelihood.
- Strategas' Daniel Clifton thinks there’s a good chance the new Congress will “slow down EPA rules on coal” which have limited its use by utilities, and any approval for the Keystone XL pipeline would mean more rail transport for coal, a problem Peabody Energy (BTU +4.4%) has said was limiting its coal sales.
- ANR +5.8%, CNX +3%, WLT +6.3%, CLD +4.5%, ACI -0.2%.
Oct. 27, 2014, 3:10 PM
- Investors see that the worst may be over for the coal market after a series of output cuts around the world, according to Peabody Energy (BTU -3.3%) Chairman and CEO Greg Boyce, pointing out that coal pricing has been essentially flat for about nine months.
- "There’s going to be a long lag where you’ve got less supply than demand,” Boyce says, and "that’s going to have a strong, strong pull for the sector."
- The CEO says catalysts coal investors are anticipating include rising Chinese demand and an improvement in U.S. railroad capacity to deliver from mining regions such as Wyoming’s Powder River Basin, where BTU produces most of its thermal coal.
- ETF: KOL
Oct. 10, 2014, 4:21 PM
Oct. 9, 2014, 12:19 PM
- Teck Resources (TCK -7.2%) tumbles to five-year lows after China, the world’s top coal importer, said it will levy tariffs of 3%-6% on imports of coal as of Oct. 15.
- The sudden move reintroduces taxes China had scrapped, and is seen by analysts as an attempt by the government to help its ailing domestic coal production sector.
- TCK's sales of commodities directly into China accounted for more than 26% of overall revenue in 2013, or nearly C$2.5B; it is unclear what portion of TCK’s revenues from China were generated by coal sales, but coal represented 44% of overall revenue in 2013.
- Among other top coal names: ACI -11.7%, CLF -11.5%, BTU -9.2%, WLT -7.2%, ANR -6.4%, CLD -5.5%, CNX -4.8%.
- ETF: KOL
Oct. 8, 2014, 12:24 PM
- Morgan Stanley analysts are the latest to dump on coal stocks (NYSEARCA:KOL), as it lowers its price forecast for hard coking coal to $125/ton next year and says 2015 appears likely to bring a more gradual price recovery than previously expected.
- The firm downgrades Walter Energy (WLT -10.3%) to Equal Weight from Overweight with a $4 price target, down from $16, noting that WLT likely has sufficient liquidity through 2015 but citing the uncertain timing and magnitude of a price recovery as leaving an insufficient margin of safety.
- Peabody Energy (BTU -1.2%) is the firm's preferred play in coal because it is less liquidity constrained than other coal producers; BTU "offers multiple ways to win, with diversified met, domestic thermal and seaborne thermal exposure."
- Also: ACI -6.4%, CLF -5.6%, CLD -5.2%, ANR -3.4%, OXF -2.3%.
Sep. 26, 2014, 4:25 PM
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