Coal Sector Struggles As Natural Gas Takes Over

Reuters reported that increased pressure is being placed on the coal industry, as natural gas takes over as the primaru fuel source in the US.

As quoted in the report:

Analytics company StarMine places the 1-year default probability for the coal sector at 6% — one of the poorest readings of any group — and says several downgrades are expected. Its data indicate that companies including Alpha Natural Resources, Walter Energy and Arch Coal are facing downgrades by the major rating agencies. Standard & Poor’s currently rates Alpha Natural and Walter Energy at BB- and Arch Coal at B+; StarMine has them all at triple-C.

CreditSights commented:

Overall coal demand is running about 20% below its given year-average to-date in 2012. And coal inventories at utilities are 17% above the five-year average.

Click here to read the full Reuters report.