Putting the Pressure on Coal
Today, BMO cut its rating on Alpha Natural Resources (NYSE: ANR) to underperform from outperform today, based on relatively high debt levels and deteriorating margins. Alpha Natural Resources dropped as much as 10.16% on the day. It was the biggest decliner among components in the S&P 500. BMO also cut Arch Coal to underperform from market perform. Arch Coal shares fell 3.9%. Other decliners were Consol Energy Inc. at 2.75% and WPX Energy at 2.34%.
On July 9, Patriot Coal filed for Chapter 11 Reorganization to improve the company's long term prospects. “The coal industry is undergoing a major transformation and Patriot's existing capital structure prevents it from making the necessary adjustments to achieve long-term success,” Chief Executive Officer Irl F. Engelhardt said in a July 9 statement.
The coal industry has been getting hammered as a whole, and its current slump may last for quite some time yet, because of the shale-gas boom.
Billionaire Wilbur Ross told Bloomberg, because of the boom, the slump will last for years. He goes on to say “the biggest pressure on the U.S. coal is gas; noting the supply has rising with the increase in hydraulic fracturing shale-rock.
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