Coal Mining Stocks: Easy Come, Easy Go (BTU, ACI, ANR, PCX, JRCC, CLD)

Just yesterday we noted that coal stocks were getting a nice boost based on the expectation that the stocks had just about hit bottom. One day does not a trend make, but there’s really no reason to believe that coal mining stocks are going to recover substantially any time soon.

Peabody Energy Corp. (NYSE: BTU), Arch Coal Inc. (NYSE: ACI), Alpha Natural Resources Inc. (NYSE: ANR), Patriot Coal Co. (NYSE: PCX), James River Coal Co. (NASDAQ: JRCC), and Cloud Peak Energy Inc. (NYSE: CLD) all posted gains of anywhere from 3.5% to more than 8% yesterday. All are giving about half of that back today.

The reason is the worse-than-hoped-for report on China’s GDP growth (our coverage here). The 8.1% growth rate was sharply lower than the 8.9% growth in the fourth quarter of 2011. But investors were hoping for better — and for no apparent reason. The IMF lowered its estimate of China’s 2012 GDP growth to 8.2% earlier this week and the Chinese government itself is targeting growth at just 7.5%. If the government truly means to hit that target, more contraction in the growth rate must be assumed to be coming.

Coupled with declining domestic coal consumption, US coal miners face another quarter — at least — of tough going. Year-to-date rail transportation of coal is down by 200,000 railcars from a year ago and about the only thing that can put demand back on track is hotter-than-expected weather, which would increase the demand for air conditioning.

Yesterday’s bets on coal having hit a bottom were likely premature. Here’s the take from Credit Suisse, cited at nasdaq.com:

We are lowering our 2012 met coal forecast by ~3% (2013 unchanged) and our seaborne thermal coal price by ~10% in both 2012 and 2013. Domestically, we are lowering our U.S. thermal coal price by an average of 11% for 2013.

Share prices for these coal companies are down as much as -80% in the past 12 months, with Cloud Peak down the least at -30%. If the analysts at Credit Suisse are right, there’s still room at the bottom.

Peabody is down nearly -4% today at $28.19 in a 52-week range of $27.11-$68.30.

Arch Coal is down nearly -6.5% at $9.88 in a 52-week range of $9.88-35.06.

Alpha is down more than -3% at $15.57 in a 52-week range of $13.80-$59.20.

James River is down -2.6% at $4.88 in a 52-week range of $4.51-$25.39.

Cloud Peak is down more than -4% at $14.76 in a 52-week range of $14.65-$24.34.

Paul Ausick