Coal sector hit by news from China too
Overshadowed by the losses suffered by gold, the share price of many coal companies also took a severe hit on Monday following the disappointing economic news from China which reported lower than expected gross domestic product (GDP) growth on Monday.
China reported 7.7 percent GDP growth, compared with a year earlier in the first quarter. This was weaker than in the fourth quarter of last year and below economists’ expectations of an 8 percent expansion. This added to fears that a slowdown in China's growth could soften global demand for certain kinds of coal.
Citi analyst Brian Yu cut his 2014 forecasts for hard coking coal used in steel production by 11 percent to $190/st. He added that the material's six-month outlook also looks slightly worse with third-quarter 2013 contracts pegged at $165/st, which is better than current spot prices, but below second-quarter levels.
The news raised concerns that China, the world's biggest producer and consumer of coal, will need less of it for power generation and construction.
In Monday afternoon trading:
- Alpha Natural Resources fell 68 cents, or 8.6 percent, to $7.23.
- Arch, down 37 cents, or 6.9 percent, to $5.02.
- Walter Energy Inc., down $2.85, or 11.8 percent, to $21.26.
- Peabody Energy Corp., down $1.17, or 5.6 percent, to $19.60.
- James River Coal Co., down 14 cents, or 7.5 percent, to $1.68.