SANDY SHORE

DENVER (AP) ¿ The nation's coal industry should remain stable despite weaker demand because of cost-cutting measures to conserve cash, according to a Fitch Ratings report released late Thursday.

Producers also are faced with lower natural gas prices, and diminished demand for electricity and metallurgical coal used in strengthening steel, said the report, "Coal Producers Update: High Inventories, Low Gas Prices, Production Cuts."

Another factor weighing on the industry is ongoing concerns about carbon emissions, Fitch Ratings Director Monica M. Bonar said.

"We are seeing more producers scaling back capital spending together with planned production to conserve liquidity," she said.

"Looking ahead, we expect to see more instances of building cash balances than either debt repayment or share repurchases, and opportunistic merger and acquisition activity, generally with a high equity component," she said in a statement.

Well-capitalized producers have liquidity and modest near-term debt maturities, Fitch said, forecasting a stable outlook.

Although the industry has seen lower spot prices this year, prices for most steam coal contracts for 2009 and part of 2010 were set in late 2007 and early last year when prices were higher, Fitch said.

If you liked this article you might like

What's Behind the Surge in Energy Stocks

Hillary Clinton Says Prosecuting Individuals is Key to Wall Street Reform