NEW YORK (AP) â¿¿ Shares of some coal mining companies rose Friday after an analyst predicted the battered industry may see improvement next year, if prices become more competitive and demand strengthens.
Coal is becoming more competitive since natural gas prices have risen closer to $4 per 1,000 cubic feet. It was below $2 earlier this year. And coal demand is expected to pick up as emerging-market economies get healthier, Sterne Agee analyst Michael S. Dudas said.
The coal industry has suffered since a boom in production and growing supplies caused the futures price of natural gas to hit a 10-year low of $1.91 per 1,000 cubic feet in April. Many utilities and other companies switched to natural gas from thermal coal for fuel.
In addition, a mild winter cut demand for electricity and heating, while the slower global economy eroded demand for steel. That hurt sales of metallurgical coal used in steelmaking.Many coal companies in the U.S. and around the world have cut back production and shuttered mines to reduce costs. Several have taken steps to enhance their financial flexibility, Dudas said. Higher natural gas prices have brought some business back to coal producers recently. For example Southern Coal Corp. said earlier this month that a new multiyear contract to supply coal to American Electric Power will allow it to restart some idled mines. In midday trading, shares of Arch Coal Inc. rose 11 cents to $6.67; Alpha Natural Resources Inc. rose 24 cents, or 3.3 percent, to $7.42; and Peabody Energy Corp. gained 23 cents to $25.27. James River Coal Co. added 41 cents, or 11.5 percent, to $3.95 per share and Walter Energy Inc. rose $1.60, or 5.6 percent, to $30.15. Consol Energy Inc. fell 72 cents, or 2.3 percent, to $31.23 per share.