The global coal markets have been on a tear lately. And America's miners are still tanking.
Blame natural gas. St. Louis, Missouri-based miner Foresight Energy LP is having its worst month in three years as cheap gas continues to push the fuel out of the U.S. power mix. Alliance Resource Partners LP and Consol Energy Inc. are similarly down 10 percent since mid-March.
All three miners depend heavily on exports to make money, so the fact that they aren't rallying as global coal prices gain show just how fierce their competition against shale gas in the U.S. has become. Gas futures have fallen by more than 10 percent in the past month, making the cleaner-burning fuel more attractive to power generators. Gas dethroned coal as the biggest source of power in America four years ago.
Coal prices have rebounded to "OK levels," said Jeremy Sussman, an analyst at Clarksons Platou Securities. And "just OK levels are still a problem when natural gas is at $2.50" per million British thermal units, a three-year low.
Coal prices at Newcastle, Australia, a benchmark for Asia, have meanwhile gained in the past two weeks as stockpiles at power plants in China declined. Coal for delivery to Europe has climbed more than 10 percent, to almost $64 a metric ton.
The window for U.S. exports opens when European prices are about $82 a metric ton, "and we're not even close to that."- Andrew Cosgrove, mining analyst
The gains follow a tumultuous month for coal markets as mild weather curbed demand in Europe and Russia offered up low-cost imports, according to a research note from Mark Levin, an analyst with Seaport Global Holdings. Meanwhile, Asia's coal supplies had to compete with increasing shipments of liquefied natural gas.
(By Will Wade)