U.S. coal mining shares fell on Friday on downgrades for two companies that produce steel-making coal whose price has slumped recently.
In morning trading on the New York Stock Exchange, Alpha Natural Resources ANR.N fell 7.2 percent to $7.93 and Peabody Energy (BTU.N) was 3.6 percent lower at $25.23. Arch Coal ACI.N fell 3.5 percent to $7.66 and Consol Energy (CNX.N) slipped 1.57 percent to $34.92.
CLSA Asia-Pacific Markets cut Alpha Natural's investment rating to "sell" from "buy" and lowered Consol's to "sell" from "outperform."
Nomura analyst Curt Woodworth lowered Peabody's earnings estimates for 2013 and 2014 and cut the share price target to $22 from $25, citing cost pressures at its mines in Australia that ship metallurgical coal to Asia steelmakers.
In recent months, the price of steel-making metallurgical or coking coal has slumped from around $225 per metric tonne in July to about $160 as demand for steel has weakened.
Woodworth said Nomura projects benchmark coking coal prices of $185 per tonne in 2013 and $195 per tonne in 2014. "We expect continued supply rationalization among the higher-cost producers," he wrote.
He saw cost headwinds for St Louis-based Peabody for several reasons besides the lower selling prices, including the strength of the Australian dollar and negative impacts from a carbon tax and higher royalty rates in Australia.
(Reporting By Steve James; Editing by Marguerita Choy)