U.S. coal company shares fall on downgrades
(Reuters) - Shares in U.S. coal companies, which have been buoyed recently by positive global economic news, fell on Monday after Bank of America cut the ratings for two major coal miners.
The investment bank lowered Peabody Energy (BTU.N) to "underperform" from "buy" and lowered its stock price target to $22 from $32. It said the cuts reflected concern over cost pressures at Peabody's Australian operations.
Bank of America also lowered Walter Energy (WLT.N) to "neutral" and cut its share price target to $37 from $45.
Thermal coal prices have plummeted about 23 percent this year, as demand from electricity producers slumped with a mild winter and some utilities turned to cheaper natural gas.
The price of steel-making metallurgical coal has also fallen from around $225 per tonne two months ago, to around $160 per tonne now, as global demand for steel has weakened.
In afternoon trading on the New York Stock Exchange, Peabody was down 5 percent at $22.82 and Walter was 2.8 percent lower at $33.91. Alpha Natural Resources (ANR.N) was down 5.4 percent at $6.82, Arch Coal (ACI.N) lost 4.1 percent at $6.66 and Consol Energy was down 3.8 percent at $29.93.
Analyst Bill Burns of Johnson Rice & Co in New Orleans noted coal company stocks had risen recently following China's announcement of a steel-friendly infrastructure build-out and action from the U.S. Federal Reserve to stimulate the economy.
"But there is still a lack of progress in the economy and still an over-supply (of coal)," he said.
(Reporting By Steve James; Editing by Kenneth Barry)
- With no sign of missing plane, search spreads far across land and sea |
- Malaysia military source says missing jet veered to west |
- Toddler found with heroin at New Jersey daycare center
- UPDATE 1-Missing Malaysian plane last seen at Strait of Malacca-source
- Ukraine appeals to the West as Crimea turns to Russia |