Patriot Coal and James River Coal Volatile in the Short Term - Long Term Outlook Strong
02 Dezember 2011 - 2:16PM
Marketwired
Coal stocks got a sizeable bump earlier this week as physical coal
prices rose in line with oil, equities and the euro, bolstered by
the dollar's weakness. While the short term bump was welcome for
coal investors, a lack of spot demand from China and India has left
suppliers struggling to place prompt cargoes already unwanted in
Europe. The Paragon Report examines the outlook for companies in
the coal industry and provides equity research on Patriot Coal
Corporation (NYSE: PCX) and James River Coal Company (NASDAQ:
JRCC). Access to the full company reports can be found at:
www.paragonreport.com/PCX www.paragonreport.com/JRCC
Coal prices dropped to less than $75 per ton in November on the
New York Mercantile Exchange from $85 per ton in August. Earlier
this week an analyst at Dahlman Rose & Co said coal companies
may slow operations to cut supplies due to the dropping price and
rising production costs.
Dahlman Rose & Co. analyst Daniel Scott points out that coal
prices have dropped in the US due to competition from natural gas.
In the US, natural gas prices remain less than a third of what they
were in 2008.
The Paragon Report provides investors with an excellent first
step in their due diligence by providing daily trading ideas, and
consolidating the public information available on them. For more
investment research on the coal industry register with us free at
www.paragonreport.com and get exclusive access to our numerous
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In the longer term, emerging markets are expected to drive coal
demand higher. India's Coal Minister Sriprakash Jaiswal told
parliament in New Delhi that the country's annual coal demand may
rise 41 percent in the year ending March 2017 from the current
financial year. Coal demand is estimated to surge to 980.5 million
metric tons from 696 million tons estimated this year, the minister
said. Domestic output of coal is expected to rise 28 percent in the
period, widening the supply-demand gap to 265.5 million tons,
Jaiswal said.
Shares of Patriot Coal Corporation and James River Coal Company
both skyrocketed close to 20 percent on Monday. James River Coal
Company is one of the leading coal producers in Central Appalachia
and the Illinois Basin. The company sells metallurgical, bituminous
steam and industrial-grade coal to electric utility companies and
industrial customers both domestically and internationally. The
company reported a loss of $0.09 per share on sales of $303.9
million in the third quarter, missing EPS estimates by $0.23 and
missing revenue estimates by $33.3 million.
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