NEW YORK (AP) â¿¿ Shares of coal mining companies surged Thursday and Dahlman Rose & Co. predicted that demand may be on the rise from steel manufacturers in China. Stocks have been lifted by rising natural gas prices, which competes with coal as an energy source. Utilities have shifted quickly over the past two years to natural gas in order to generate power, but with natural gas prices rising, and they rose again by 3 percent Thursday, many expect at least some shift back to coal. And there are also some indications that Chinese spot steel margins will broaden on growing demand, according to Dahlman analyst Daniel W. Scott, which would require burning more metallurgical coal, used in the steel manufacturing process. Implied Chinese spot steel margins have increased more than 30 percent since late July, Scott wrote. The move appeared to develop after iron ore and metallurgical, or met, coal prices fell in late July and August. Chinese rebar prices began rising in early September, which led to a widening of implied spot steel margins, compared with average levels during 2012, the analyst said. As a result, iron ore prices have increased about 36 percent from 2012 lows. Scott speculated that a similar move could occur in the met coal market. China imports about 15 percent of its met coal needs. However, Scott said he expects coal companies to be cautious when they release third-quarter results. "If demand alone does not support higher prices, we would not rule out additional production curtailments," he wrote. Prices for metallurgical coal have fallen as demand for steel has weakened in the slower global economy. The mining companies have curbed production and idled mines to control costs. THE SHARES: In morning trading, shares of Arch Coal Inc. rose 69 cents, or 10.1 percent, to $7.55; Peabody Energy Corp. rose $1.92, or 8 percent, to $25.9 one and 5; Alpha Natural Resources Inc. was up 88 cents, or 12 percent, to $8.19 and Cliffs Natural Resources Inc. increased $1.17, or 2.9 percent, to $41.69.
TheStreet’s Fundamentals of Investing Course will teach you the keys to making the right decisions in any market.
TheStreet’s Personal Finance Essentials Course will teach you money management basics and investing strategies to help you avoid major financial pitfalls.
TheStreet Courses offers dedicated classes designed to improve your investing skills, stock market knowledge and money management capabilities.
More from Stocks
Warning Signs Appear, but It Is Still Too Early to Go Full Bear
There are still dip buyers jumping on intraday weakness and the indices are staying above key technical levels.
'Avengers: Endgame' Sets Thursday Box Office Record, AMC Says
AMC says it will show the film an unprecedented 58,000 times at its theaters this weekend.
Global Stocks Drift Lower Ahead of U.S. GDP Data; Dollar Tests Two-Year High
Global stocks drifted lower Thursday as investors focused on a key reading of U.S. economic growth later in the session and the spillover from a mixed set of earnings last night on Wall Street.
Uber Sets IPO Price Range to Value Group at Between $80 Billion and $90 Billion
Uber Technologies set the indicative price of its planned IPO that would value the ride-sharing group at around $85 billion, well below the $120 billion valuation investors had pegged prior to the debut of rival Lyft month.