That is the view of investment firm Raymond James.
According to recently-released data from the Energy Information Administration, US coal exports reached a record 12.5 million tons in April and are targeting the 150Mt mark whole-year.
That is 40% more than the 107Mt the nation exported last year, and the most the US has had leave its shores since 1991.
In the meantime, natural gas has become a less expensive option for utility generators. At the same time those power companies work to comply with US Environmental Protection Agency rules and eye proposed EPA regulations that could make burning coal much harder.
“Over the long haul, we suspect access to what should be a growing global seaborne coal trade will undoubtedly be beneficial to helping to offset some of the weakness in domestic demand caused by weak natural gas and/or regulatory challenges,” Raymond James analysts James Rollyson and David Feaster Jr said in a report given to Bloomberg.
Coal reached a disappointing $US54.15 a ton on the New York Mercantile Exchange June 8, an 8-cent drop and its lowest price since March 2010.
According to the news service’s analysis, prices year-to-date have fallen 22%.
Compounding what is already a bad scene for coal was Alpha Natural Resources’ announcement that it would idle four of its Kentucky operations, close another four contractor-operated mines and cut back on production at other sites amid a drop in demand.
Virginia-based Alpha also will close some of its satellite offices by the end of the year and eliminate about 150 jobs through consolidation.
The producer echoed what many other economically-challenged miners have already proclaimed. Namely, a mild winter, paired with a drop in demand and an en-masse switchover to natural gas by utility generators in favor of cheaper natural gas have weakened what was known as “big coal”
At market close Monday, Alpha’s shares hit an all-time low of $8.85, a 47 cent drop equating to just over 5%.
Since last June, the same month as it purchased Massey Energy, Alpha’s share price has sunk 80% from $47.54.
“The US coal markets have been pretty doom and gloom lately,” Rollyson said in the research note.
“In fact, many of the coal equities act as if they are going out of business.”
