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Peabody Energy and Arch Coal Lose Ground in 1st Week of April

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US coal industry

The US coal industry has been going through a rough patch, especially since the turn of the decade. Domestic demand has been hurt by the shale gas boom and by regulations from the U.S. Environmental Protection Agency requiring power plants to reduce emissions. At the same time, the global market is battling an oversupply and slowing global growth.

On the top of these challenges, governments around the world are revising their energy policies to boost cleaner fuels. American coal is at a geographical disadvantage when it comes to exporting coal to high-demand countries in Asia. Four of the top five coal-producing countries in the world are located in or around Asia. As a result, coal stocks are on a decline.

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Alpha Natural Resources gains

In an otherwise dull week for American coal producers (KOL), Alpha Natural Resources (ANR) gained 3.3%, losing its penny stock status and closing at $1.01. On April 1, ANR reduced its debt by $379 million by repurchasing notes. The debt reduction will save the company $21 million annually in interest expenses.

The losers

Peabody Energy (BTU) dropped 5.1% to end the week at $4.87 with a market capitalization of $1.4 billion, the highest among US coal stocks. Arch Coal (ACI) lost 8.5% to close at 95 cents, and Walter Energy (WLT) lost 4.2% to finish at 69 cents. Cloud Peak Energy (CLD) was down marginally to $5.82.

During the week, the VanEck Vectors-Coal ETF (KOL) rose 2.6% to $13.48. Meanwhile, the broad-based SPDR S&P 500 ETF Trust (SPY) was up 0.3%.

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