SOURCE: Five Star Equities

Five Star Equities

July 31, 2012 08:20 ET

Coal Stocks Rally as Arch Coal Provides Positive Forecast for Thermal Coal Demand

Five Star Equities Provides Stock Research on Arch Coal and Peabody Energy

NEW YORK, NY--(Marketwire - Jul 31, 2012) - Coal stocks soared last Friday after Arch Coal Inc. posted a better-than-expected earnings report and a positive forecast for thermal coal demand in the U.S. The Market Vectors-Coal ETF (KOL) -- which replicates an index that provides exposure to publicly traded companies worldwide that derive greater than 50% of their revenues from the coal industry -- surged 4.03 percent. Five Star Equities examines the outlook for companies in the Coal Industry and provides equity research on Arch Coal Inc. (NYSE: ACI) and Peabody Energy Corporation (NYSE: BTU).

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Many coal companies have been forces to scale back production as a result of dwindling demand. The low demand has seen Arch Coal idled five of their mines in the Appalachian region and forced Patriot Coal Corp. to recently file for Chapter 11 bankruptcy protection. Yet coal companies soared last week after comments from Arch Coal's President and CEO noted a bullish outlook for thermal coal.

"Summer has arrived... bringing heat, power load and increased coal burn," Arch Coal's President and CEO John Eaves said in a statement. "With improving coal demand and ongoing supply rationalization, we could end the year with domestic stockpiles below 175 million tons, the level at which we entered 2012."

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"We expect to see better balance in the second half of the year in the domestic thermal market given the ongoing rationalization of coal supply, increasing U.S. power demand, reduced coal-to-gas switching concerns and growing U.S. coal exports," added Eaves. Arch Coal reported a net loss of $436 million, or $2.05 per diluted share, in the second quarter of 2012. Shares of the company soared almost 30 percent last Friday.

Peabody Energy serves metallurgical and thermal coal customers in more than 25 countries on six continents. The company recently reported second quarter 2012 revenues of $2.0 billion, leading to adjusted EBITDA of $453.4 million. Shares of Peabody Energy rallied 6 percent last Friday.

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