Tuesday, April 1, 2014

Seeking Alpha: Arch Coal Can't Catch A Break

Maybe the best thing that can be said about Arch Coal (ACI) recently is that the company's management has been able to execute a few transactions to give the company more breathing room. Pricing for Powder River Basin (or PRB) coal has been improving lately, but metallurgical coal pricing has continued to weaken, and Appalachian thermal coal just isn't competitive with natural gas today.

Some have called Arch Coal a long-dated call option on thermal and metallurgical coal price recoveries, and I suppose that is true to a point. It certainly has been the case in past cycles that improving prices benefit struggling operators more, so Arch Coal would likely offer more upside than Peabody Energy (BTU) or Cloud Peak Energy (CLD), were PRB prices to move into the high teens and/or met coal recovery above $160/ton.

Read more here:
Arch Coal Can't Catch A Break

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