Energy

Coal Production Keeps Taking It on the Chin

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It’s a crummy time to be a coal miner. If the political backlash against coal doesn’t get you, you can bet your assets that warm winter weather will. A fresh report from the U.S. Energy Information Administration showed that coal production continues to decline. The EIA’s Coal Production report showed that production for the week ended January 2, 2016 totaled approximately 11.7 million short tons (mmst). This is an estimate on total coal production, but it did break out some regional data too.

What stands out in this report is not just that this production estimate is 1.6% lower than last week’s estimate covering the end of December. The amazing figure is that this total coal production report is a whopping 32.7% lower than the production estimate for the comparable week in 2014. It is also far worse even than what we saw for the third quarter’s negative EIA reports in 2015.

East of the Mississippi River coal production totaled 4.6 mmst, and West of the Mississippi River coal production totaled 7.1 mmst. The total U.S. 2016 year-to-date coal production totaled 3.3 mmst, 32.6% lower than the comparable year-to-date coal production in 2015.

24/7 Wall St. looked at the last quarterly review from October 2015, and things are even worse now. That EIA report from October had said:

U.S. coal production during second quarter 2015 totaled 211.1 million short tons. This was 12.1% lower than the previous quarter and 14.1% lower than second quarter 2014. Production in the Western Region, which represented about 55.5% of total U.S. coal production in second quarter 2015, totaled about 117.3 million short tons (10.5% lower than second quarter 2014).


Arch Coal Inc. (NYSE: ACI) was last seen down a whopping 11% at $0.811. It has a 52-week range of $0.80 to $15.40. Can you believe that Arch Coal has a market cap of only $17 million now?

CONSOL Energy Inc. (NYSE: CNX) is half coal and half energy. Its shares were last seen down 2.3% at $7.40 on Thursday. CONSOL has a 52-week range of $6.30 to $34.56.

The Market Vectors Coal ETF (NYSEMKT: KOL) is also taking it on the chin. This coal ETF was last seen down 4.35% at $5.78 versus a 52-week range of $5.78 to $14.66. This ETF is harder to peg a value on because so many of its components are listed outside of the United States and many U.S. investors will have never even heard of them.

It seems like the coal companies have little hope. A bull market has been horrible for them, and new climate change agreements ahead will not be favorable for the coal sector.

If the politicians don’t get you, the warm winter weather will.

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