Coal news and updates

US coal shares tumble to record lows after job cuts, restructuring speculation

US coal stocks were among the biggest losers in New York on Tuesday after the protracted slump in demand for the fossil fuel led to a rash of layoffs last week.

Alpha Natural Resources Inc. fell to a record low after announcing plans Friday to idle a West Virginia mine and fire 439 workers. Peabody Energy Corp. also slid to an all-time low.

The industry is confronting its worst depression in decades amid stiff competition from cheap natural gas, tougher emissions standards and slowing demand from China, the world's largest consumer of the coal used in steelmaking.

"Although we can see light at the end of the tunnel, and firmly believe that there is a future for this industry, the truth is that we don't know how long the tunnel is," Nathan Littlewood, an equity analyst at Credit Suisse Group AG in New York, said in a report Tuesday as he initiated coverage of the sector.

He said there's a "real possibility" Alpha will face a liquidity crisis in mid-2016 when part of its revolver credit line matures. No one at the company was immediately available for comment.

Alpha fell 8.2 per cent in New York to 60 cents, the lowest close since it started trading in 2005. Peabody fell to a record low of $US3.41. The rout followed the Memorial Day public holiday on Monday, when US markets were closed.

Debt talks

Arch Coal Inc. fell 12 per cent, also closing at a record low, after the Wall Street Journal reported Friday that the company is working with advisers to explore ways to trim its debt load through deals with bondholders. Arch has $US5.2 billion in debt, according to data compiled by Bloomberg. Company spokeswoman Logan Bonacorsi declined to comment on "market rumors or speculation" in an e-mail.

Also in the US coal industry, Patriot Coal Corp. filed for bankruptcy earlier this month for the second time in three years and closely held Murray Energy Corp. announced plans late Friday to fire as many as 1,800 workers in three states and idle a mine in northern West Virginia.

Littlewood rates both Alpha and Arch Coal the equivalent of sell, with 50-cent target prices. He has a hold recommendation for Peabody, with a $US4.50 target, and rates Cloud Peak Energy Inc. as the equivalent of buy, with an $US11 target.

source: http://www.smh.com.au