Tuesday, March 24, 2015

Research firm says coal's future 'increasingly bleak'

The coal industry's future looks "increasingly bleak" and could soon face "a wave of bankruptcies," says an investment note from Macquarie Research, Nick Cunningham reports for Oil Price. The main reasons are competition from natural gas, proposed rules to cut greenhouse gases and a reduction of foreign investors buying U.S. coal, which has led to shuttering of several coal operations.

"Macquarie Research downgraded its projection for coal prices by $5 per ton and said that the only way to bring the market back into balance was for capacity to be shut in," Cunningham writes. Investors are starting to leave the industry and "companies may struggle even to access financing, forcing them to close up shop. Arch Coal and Alpha Natural Resources, for example—once prominent and stable coal producers—have seen their share prices plummet into penny-stock territory." (Read more)

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