Zacks Industry Outlook Highlights: Arch Coal, Walter Energy, Alpha Natural Resources and Patriot Coal Corporation

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Aug 03, 2011, 09:30 ET

CHICAGO, Aug. 3, 2011 /PRNewswire/ -- Today, Zacks Equity Research discusses the Coal, including Arch Coal Inc. (NYSE: ACI), Walter Energy Inc. (NYSE: WLT), Alpha Natural Resources Inc. (NYSE: ANR) and Patriot Coal Corporation (NYSE: PCX).

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A synopsis of today's Industry Outlook is presented below. The full article can be read at

http://www.zacks.com/stock/news/58270/Coal+Industry+Stock+Review+-+August+2011

Demand for U.S. coal was strong in the first quarter. This was mainly driven by metallurgical exports but demand for thermal coals remains strong in both the domestic and international markets.

Demand Upsurge in Asian Countries: The global upsurge in coal demand has been the key price driver since the end of the recession. We expect this trend to continue in future mainly due to the growing energy needs of the world's two largest coal consumers, India and China.

China, the world's fastest growing major economy, has massive coal reserves. But China's energy consumption in 2010 witnessed such rapid growth that the country's imports for the year exceeded exports. China has overtaken the U.S. as the world's heaviest consumer of coal. In spite of the rise in China's coal imports and ample domestic coal production, the country continued to experience shortages in 2010.

Meanwhile, with the rising population and economic growth India witnessed in 2010, the country's demand for coal has also risen substantially. Coal accounts for nearly 55% of the country's energy consumption needs. The last four decades has seen the country's commercial energy consumption rise by about 700%. Going forward, India plans to double electricity generation capacity by 2012, which could see the country importing in excess of 200 million tons of coal.

U.S. Coal Exports on the Upside: Strong global demand for coal, particularly for metallurgical coal used to produce steel, resulted in sharp increases in U.S. coal exports. The earthquake in Japan may have been a short-term dampener on growth, but globally, the steel industry remains in full growth mode. China, the world's largest blast furnace iron producer, continued its strong growth in 2011 with over 58% of the world's production.

Supply constraints in key nations such as Australia, Indonesia, South Africa, South America and Canada, prices for metallurgical and thermal coal provide opportunity for more exports from the U.S. Thus we believe met coal companies like Arch Coal Inc. (NYSE: ACI), Walter Energy Inc. (NYSE: WLT), Alpha Natural Resources Inc. (NYSE: ANR) and Patriot Coal Corporation (NYSE: PCX) form attractive investment avenues.

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