September 16, 2008
Coal Shares Fall; Some See Bottom
Coal industry shares continued an extended decline Monday on Wall Street, though some analysts believe the sector may already have struck bottom.
Standard & Poor's upgraded some of the biggest players, including Peabody Energy Corp., Consol Energy Inc., Arch Coal Inc., Massey Energy Co. and Walter Industries Inc.
"The upgrades, in general, reflect improved coal pricing and the expectation that in the coming year the coal companies will benefit from the run-up in prices through better contract pricing," Standard & Poor's said in a note Monday. "Indeed, a number of companies have already locked in the majority of 2009 production at attractive prices."
But the ratings agency said changes in financial policy and scope of operations were the biggest reason for its sunnier outlook.
After more than a year of declines due to high inventories, coal companies have benefited from rising North American coal prices over the past several quarters. Increasing global demand, coupled with supply disruptions, have boosted prices.
There was a broad sell-off on Wall Street Monday in which the Dow Jones industrial average dropped 300 points. Coal companies were not immune.
Peabody shares fell $4.52, or 8.3 percent, to $49.47.
Consol shares fell $6.04, or 10.3 percent, to $52.62.
Arch shares fell $4.60, or 11.2 percent, to $36.31.
Massey shares fell $6.01, or 13.47 percent, to $38.62.
Walter Industries shares tumbled $10.92, or 15 percent, to $61.53.
-the associated press
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